I’ve got about $25k in credit card debt split between two companies. A year ago, I signed up for a Debt Management Plan through a third-party company. They got my interest rates lowered from 29% to 3%, and I’ve been paying them $900 a month—they then pay the credit card companies for me. As part of the deal, my credit card accounts were closed. I recently got enough money to pay everything off at once, but I was wondering if I could try negotiating with the credit card companies directly to lower the total amount. Would this hurt my credit more, or has the damage already been done since I joined the plan? Anyone tried this before? Thanks!
Check your agreement with the DMP first. Some of them have penalties or fees for early payoff.
Charlie said:
Check your agreement with the DMP first. Some of them have penalties or fees for early payoff.
I asked them already, and they said I can pay it off whenever. I just need to let them know once it’s done so they can close my account with them 
@Teo
Then yeah, no harm in calling your creditors and seeing if they can work out a hardship plan with you.
Charlie said:
@Teo
Then yeah, no harm in calling your creditors and seeing if they can work out a hardship plan with you.
Is that because my credit already took a hit when I joined the DMP?
@Teo
Yeah, closing the accounts would have already affected your score. If you can negotiate yourself, you might save some money that would’ve gone toward DMP fees.
Charlie said:
@Teo
Yeah, closing the accounts would have already affected your score. If you can negotiate yourself, you might save some money that would’ve gone toward DMP fees.
Got it, thanks a lot!
When they negotiated, did they only lower your interest rates, or did they also reduce the actual balance you owe? If they cut your balance, they might push back on further negotiations since they already gave you a break.
@Jay
It was just the interest rates, not the principal.
I work with these debt relief programs, and there’s no penalty for paying early. That said, don’t expect them to lower your balance. The deal is what it is. Just pay it off and be done with it.
Linden said:
I work with these debt relief programs, and there’s no penalty for paying early. That said, don’t expect them to lower your balance. The deal is what it is. Just pay it off and be done with it.
They told me I could call the credit card companies directly to pay it off, then just let the DMP know after. The company I used is nonprofit, don’t know if that makes a difference.
@Teo
It doesn’t really change anything—there’s no renegotiation for a lower amount at this point.
If you haven’t already missed payments before entering the DMP, the main impact on your credit was from your card balances and closing the accounts. Once you pay off the debt, your score should recover over time. But if you settle for less than what you owe, that part will stay on your report for years.
@Sky
Good to know, thanks!
Where did you find a company that negotiated your debt? This is new to me. I’m 21, never missed a payment, but after moving out, my credit card debt has piled up (around $15k). I feel stuck. Working overtime but still struggling.
I just signed up with Money Management International. My bank transferred me to them when I called about my situation. I took a day to check them out before agreeing. Now I’m just waiting to see if my bank accepts the plan and lowers my interest rates. Hopefully, it works out.