Why does CCC ruin your credit?

[MEA2]

I've been reading here that consumer credit counseling and debt reduction programs show up on your credit for 7yrs just like a bk.Does anyone know why or the specifics of this?

[FilingOnMyOwn]

Nope, but its true.

[Danielle1981]

Really?

[FilingOnMyOwn]

Yup.

[lrprn]

Here's what one CCCS provider in MO had to say about CCCS debt management plans (DMP) and credit reports:

"Even if you enter a CCCS Debt Management Plan, CCCS does not report your participation in our Debt Management Plan to credit bureaus. However, each creditor deals with CCCS clients in a different way. Some creditors may report that your account is included on a DMP. Creditors may report your account as current when they receive our proposal, while some wait until they have received three consecutive payments through CCCS. They appreciate that you are honoring your debts rather than running from them through bankruptcy, and after seeing a consistent payment history through CCCS, may look at you as a better credit risk than the typical consumer.

Other creditors will consider your account delinquent and will continue to report these delinquencies even though you are working with CCCS. They will accept the payment and stop calling you, but they may still report negative information to credit bureaus. It is up to the individual creditor to make changes in the "History of Payment" column on your credit report. CCCS cannot remove information from your credit report but we can assist you in contacting your creditors for a review of your account." (from http://www.cccs-swmo.com/creditreport.php )

No mention is made of how long the DMP information can remain on your credit report. I checked and all the CCCS websites have pretty much the same thing to say, but none tell how long the creditors can keep reporting CCCS information to the CRs. My guess is that CCCS is treated like any other debt - depends on the creditor whether it will be reported correctly or not or for how long.

[djk]

I've been reading here that consumer credit counseling and debt reduction programs show up on your credit for 7yrs just like a bk.Does anyone know why or the specifics of this?

prior to filing for chapter 7 I heard a lawyer express the opinion that entering a debt repayment program was somewhat worse than filing chapter 7. He
thought that most creditors view settlements at about the same level they view a bankruptcy over the long term and you end up paying something also.
The way it was put was "If you are going to enter a Debt Repayment Program you might as well file chapter 7". But this fellow was rather a maverick and leaned toward being outspoken so take it with a grain of salt.

[Minnymouth]

Many people are reluctant to use CCC and other type payment plans BECAUSE often some creditors will not paraticipate in the program and then you still have the same problems existing. A lot of attorneys will suggest bankruptcy before using a repayment program. Because BOTH are reflected on your credit report as being a "bad credit risk"...

So most of the time you are just as well off to file BK and "clean the slate" rather than have part of your creditors in the payment plan and part of them not....thus eliminating extra fees by the debt program, interest, etc...

[FraggleRock]

If you do a CCC it's on your record while you are in it plus 7 years for it to get off. If you do a BK it's a bigger hit at first but it is gone in 7 years. Doing the CCC may take 2-3 years+7 to get off off. If you file BK it can be gone in 7, giving you a couple years jump on repair.

[ccidiot01]

We tried to fend off filing by trying the CCCS route. The monthly payments were just too high and we had to stop after 5 months. One problem I noticed is that not every CC company recognized our efforts. They accepted payments from the CCCS, but never acknowledged our enrollment. As a result about 4 companies continued to call us 4-5 times a day and continued to charge us late/over-the-limit fees. As a result, we ended up about $2500 futher in the hole after CCCS than when we entered.

A BK attorney and I discussed this situation and how it seems that those who make some attempt to pay the debt are treated so poorly by the CC company that it leaves one no alternative outside of BK. I guess BK is a write-off for them...a write-off must be better than getting their money at 5% over 60 months...