How Credit Counseling Saves Couple out of $92,000 in Credit Card Debt

From the Editor: This is a guest post by Bobby Dee

There’s been a lot of talk about debt in the news lately, from the debt reduction talks on Capitol Hill to entire countries like Greece and Italy whose economies are crumbling under the pressure of their debt. These countries should take a page out of the playbook from a Jackson, Michigan couple who recently rid themselves of $92,000 in credit card debt.

The Baileys didn’t make this happen overnight, it took over 5½ years for them to get to zero. “I still can’t believe it when I hear the amount. I don’t wish this on anybody,” says Sue Bailey.

This massive debt reduction earned the couple recognition from the National Foundation for Credit Counseling, the non-profit association for credit counseling agencies that helps educate consumers on personal finance and how to get out of debt. They made their announcement at their annual conference in San Francisco.
$92,000 and 17 Credit CardsJerry Bailey, an associate pastor at Grace Church in Jackson, had a lot going on between 1992 and 2005. From their two daughters getting married, numerous home repairs, countless car problems, and other emergency expenses they were monetarily stretched thin. Unfortunately their financial safety net was their credit cards, and when anything financially unexpected came up their first reaction was to put it on the credit card.

All those credit card charges piled up, Jerry handled the finance for the family and did everything he could to keep his wife, a registered nurse, out of the loop, but eventually everything started closing in on Jerry and it was hard to hide the elephant in the room. “My first clue was when the people started calling our house,” Sue Bailey says. “My husband is very loving and very protective, to a fault sometimes.”

The house of cards came crashing down on top the Bailey’s when one of their daughter’s got married and they had to book the reception on a credit card. The finally got around to tallying the total damage of all 17 of their credit cards, and they were stared at the face of a staggering $92,000 total.

Harassing Phone Calls; Scary Credit Card Balances

From that point on the Bailey’s lives revolved around not answering the phone and avoiding bills in their mailbox. Like most people in their predicament, they would not pick up the phone without checking the caller ID, and they dreaded going to the mailbox for fear of the bills that they might find in there.

In 2005 they decided to do something about their credit card debt and contact their credit union in regards to what to do with their overwhelming debt load. The banker at the credit union advised them that they should probably file for bankruptcy; that went against the Bailey’s principals and they firmly believed that they should pay what they owe. The credit union then gave them the phone number for a non-profit credit counseling agency that was based in Michigan in hopes that the credit counseling agency could recommend some strategies or alternatives in lieu of filing for bankruptcy.

Non-profit credit counseling agencies are organizations that help individuals who are suffering from credit card debt. Their primary instrument in helping financially distressed individuals is the Debt Management Plan, when a consumer with unmanageable credit card debt enrolls in the DMP the process begins in negotiating lower interest rates, fee waivers and the lowering of the overall debt load. This is entirely different from the often confused “debt settlement”, which can be very harmful to your credit score and puts you at risk of getting sued by your creditors, the DMP on the other hand does not hurt your credit score and is an extremely viable alternative to bankruptcy.

Today the Baileys’ are enjoying a debt free lifestyle. They no longer avoid the telephone calls or the mailbox; of course they would’ve completely avoided the entire fiasco if they could. “We’d tear up the credit cards,” Sue Bailey says. Their advice to others is to set up a savings account; the NFCC recently released a poll that 64% of Americans do not have $1,000 for an emergency expense, and if the Jerry and Sue Bailey could of saved a little money every month they could of avoided having to depend on their credit cards.

The entire country, from Capitol Hill to Wall Street to Main Street, could use learn a little bit from the Baileys, a lot of hard work, determination, and accountability go a long way when it comes to debt; owning up to your debt and facing the consequences of your actions is, more often than not, is a best practice.

About the Author: Bobby Dee is a personal finance blogger and works for one of the top Christian debt relief organizations in the country whose credit counselors have been helping consumers for over 20 years.

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