BALTIMORE — More people are defaulting on their credit card payments as debt continues to climb. There are several debt repayment strategies, but one in particular helped Darryl France dig his way out of $25,000 in debt in just four years.
“You know, you put something on a credit card, it’s kind of out of sight, out of mind,” said France.
Everyday expenses, along with larger ones like an out-of-state move, childcare, and car payments while temporarily living on a single income, contributed to his financial situation.
“I was literally just paying enough to meet the limit, and that would be my balance until the next month when the interest hit. Just seeing how it was compounding and the time that it would take with me paying the minimum to pay it off, just kind of started to get stressful,” France explained.
He began searching for help online and initially considered a debt consolidation loan.
“I didn't want to take on another loan in order to pay it back. I just didn't see that would be, you know, the smart way to go about it,” France said.
He was still making payments and didn’t yet qualify for debt settlement, so he looked into debt management.
“We walk every consumer through a financial analysis. We establish a budget. That's something that a lot of folks haven't done before, to understand what's coming in, what's going out, and then we take a look at assets, expenses, income, creditors, who you owe, how much you owe, what the status of the debt is, and then we can determine if you might be a good fit for a debt management plan, and what your creditors will do as far as an interest rate reduction goes,” said Thomas Nitzsche, a financial educator at Money Management International, a non-profit debt counseling agency.
MMI successfully negotiated France’s interest rates from 25 percent to just under 6 percent. In roughly four years, he paid off his six credit cards.
However, this journey wasn’t without its sacrifices, including the need to immediately close those cards.
“It all just really came down to being smarter with my budgeting - maybe this month we can't go out to eat as much, or we don't take a vacation this year, just making small sacrifices here and there for the greater good,” France said.
In terms of cost, France paid a small monthly fee for the service.
“Every payment I make, there's a $40 fee that goes to MMI for their processing and providing the service, which I found more than reasonable, considering the heavy interest charges that I was paying on each card. That was a drop in the bucket, comparatively,” said France.
Nitzsche added that this option isn’t for everyone, but it can be a lifeline for those in need of expert advice.
“We're seeing not just more people, and that's been sort of a gradual increase over the last couple of years, but we're also seeing higher levels of debt among new consumers. So in Maryland, year-over-year, it's up about 10% over last year, and that has continued to increase. A few years ago, the average consumer came to us with about $20,000 in unsecured debt, and that number is now closer to $30,000,” Nitzsche noted.
France, like many others, worried about the stigma and shame of asking for help, but now he’s sharing his experience to encourage others to take that step toward financial freedom.
“I would just say, once you get out of debt—because you can get out of debt— stay out of debt, right? Just find ways that you don't need to rely on the credit card so much. And again, if you're going to use them, just make sure you use them wisely,” France recommends.
Debt management plans are designed for unsecured debt like credit cards and retail accounts. They're not suitable for home, auto, or student loans. For those debts, consumers should contact their lenders directly to devise a repayment plan.
For more information about Money Management International, click here. You can also find a full list of non-profit credit counseling agencies through the U.S. Department of Justice.