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Debt Settlement Companies
Posted on 11/15/11 at 9:08 pm
Posted on 11/15/11 at 9:08 pm
Anyone have any experience working with one of these companies? I'm going through a divorce and have gotten in a little over my head in credit card debt trying to live. I'm making a decent income now, but I'm only able to make a little more than the minimum payments. Would debt settlement be worth the credit score impact or should I just continue to make the payments as I've been doing?
4
Posted on 11/15/11 at 11:06 pm to JJLSU
My parents have and it was a long tough process for sure. My parents were 170k in debt (years of build up and stupid pay for it later attitude, kids, etc)
They will make their last payment at the end of the month. They have paid it off in 5 years. They couldn't use a credit card obviously. Their score was real high and crashed something awful when they did it (in the 500's) now, it's back over 800. All of the companies except discover slashed their interest rate to 2% or less. I don't think that would have happen if they didn't use a debt settlement company.
I couldn't be prouder of my parents in my life. Sure, they made many many bad financial decisions but what they have done the last 5 years is amazing to me. They have worked 4 jobs for the last 5 years. They did this because they never would have been able to retire and didn't want to pass it on to family.
It's going to suck either way you do it. My parents just did the minimum payment stuff and it just builds.
Good luck to you and I hope this helps. Just know that you're not alone. People have done what you're about to do. It's not easy by any means and times get really really tough. But you can and will do it. They are so damn excited about being debt free.
They will make their last payment at the end of the month. They have paid it off in 5 years. They couldn't use a credit card obviously. Their score was real high and crashed something awful when they did it (in the 500's) now, it's back over 800. All of the companies except discover slashed their interest rate to 2% or less. I don't think that would have happen if they didn't use a debt settlement company.
I couldn't be prouder of my parents in my life. Sure, they made many many bad financial decisions but what they have done the last 5 years is amazing to me. They have worked 4 jobs for the last 5 years. They did this because they never would have been able to retire and didn't want to pass it on to family.
It's going to suck either way you do it. My parents just did the minimum payment stuff and it just builds.
Good luck to you and I hope this helps. Just know that you're not alone. People have done what you're about to do. It's not easy by any means and times get really really tough. But you can and will do it. They are so damn excited about being debt free.
This post was edited on 11/15/11 at 11:12 pm
Posted on 11/16/11 at 6:27 am to JJLSU
quote:
Dave Ramsey's advice: I would stay away from a debt management company no matter what. If you go to the Federal Trade Commission's website, ftc.gov, you will find that the level of complaints on debt management companies is one of the top categories of all things complained to the Federal Trade Commission. In other words, there are a ton of them that are scams and/or incompetent, operate poorly, don't do a good job and so on. That's problem number one.
Problem number two is you need to fix your situation. You can fix it a lot cheaper than paying someone else to do it. The majority of these people collect their fees upfront, and you may or may not get anything from them after they do that. If you're not able to pay your payments, pay what you can and take the ones that you can't pay and begin to work and save to do your own settlement with them as fast as you can.
Debt settlement companies do not simply wave a wand and make your debt go away. The only reason a creditor is going to take less than is owed to them is if they think they're not going to get paid. They don't settle just because it's inconvenient for you to be in debt. They don't take less than is owed to them when you're current with them. After you've not paid for many months, because I'm assuming you couldn't pay and you're six months behind, then they will look at you and settle if they think they can get what you're offering. Always do that in writing, and always—no matter what happens—do not allow them to have electronic access to your checking account, no matter what they say, no matter what they threaten because I will tell you from experience, they lie. They will clean out your checking account. So they get no money unless it's in writing, they get no electronic access, and you settle with them yourself. But I would not use a debt settlement company.
quote:
Dave Ramsey's advice: The only time a credit card company takes less than what you owe is if they think they won't get paid. If you go to a debt settlement company, they have you pay them a monthly amount. Most is their fee, and a little goes into a savings account that they will use to settle with the creditors. But the collectors won't get paid for six months, and it will destroy your credit. They are scum and they rip you off.
LINK
This post was edited on 11/16/11 at 6:30 am
Posted on 11/16/11 at 9:54 am to Will Cover
As a former mortgage broker, if you were signed up with a "Consumer Credit Counseling" type debt settlement company, we viewed it as a sort've open Chapter 13 Bankruptcy. Unless the owned their home or a vast portion was available in equity, we couldn't work with them on refinances.
Even then, the rates we gave to folks like that were extremely disadvantageous to the potential borrower.
As a guy who-before he got into origination-did collections work on past-due mortgages, when we heard that someone had signed up with Consumer Credit Counseling/debt consolidation companies, we immediately coded them the same way as if I were to have found out a customer filed for Chapter 13 & gave me a file number.
They will 86 your credit in short order, & if something happens, you will find them harder to deal with than your creditors. My advice-and many here with knowledge far greater than mine might scoff-is to negotiate with the companies on your own, individually.
Stop all the cards. Call them. NOW. Close them. Then ask to speak to someone to negotiate payment arrangements. Keep track of all your calls.
But if you read Ramsey's book "Total Money Makeover", he'll give you a DIY angle on how to take care of this that honestly worked for me. I truly believe it'll help you far less painfully than will the CCC people, & the tangible negatives that come along with them won't be as severe if you tough it out yourself.
Just show some self-discipline. You can do it.
Even then, the rates we gave to folks like that were extremely disadvantageous to the potential borrower.
As a guy who-before he got into origination-did collections work on past-due mortgages, when we heard that someone had signed up with Consumer Credit Counseling/debt consolidation companies, we immediately coded them the same way as if I were to have found out a customer filed for Chapter 13 & gave me a file number.
They will 86 your credit in short order, & if something happens, you will find them harder to deal with than your creditors. My advice-and many here with knowledge far greater than mine might scoff-is to negotiate with the companies on your own, individually.
Stop all the cards. Call them. NOW. Close them. Then ask to speak to someone to negotiate payment arrangements. Keep track of all your calls.
But if you read Ramsey's book "Total Money Makeover", he'll give you a DIY angle on how to take care of this that honestly worked for me. I truly believe it'll help you far less painfully than will the CCC people, & the tangible negatives that come along with them won't be as severe if you tough it out yourself.
Just show some self-discipline. You can do it.
Posted on 11/16/11 at 10:11 am to JJLSU
If you have more than one credit card, pick one card at a time and pay a little more than the minimum payment. When that's done, work on the next one, etc.
I have heard bad things debt settlement companies.
I have heard bad things debt settlement companies.
Posted on 11/16/11 at 10:39 am to Red Stick Tigress
My old roommate worked a company called credit solutions of America out of Dallas--read some of the reviews and if you still think using one of these companies to help is the way to go, think again!Big time scam!
Posted on 11/16/11 at 12:31 pm to JJLSU
Thanks for all the responses. They all make good sense and give me something else to consider. I guess what's most frustrating is that I'm earning a pretty good income but there is nothing left over at the end of the month AND I'm not making up any lost ground on these debts. I think I will contact each card individually to discuss the debts. I haven't made any late payments as of yet so I'm not sure what their take on it will be. I owe about $14000 in credit card debt and will have to begin repaying student loans in January - just finished my second degree this summer.
Posted on 11/16/11 at 12:44 pm to JJLSU
Buddy of mine went through something similar about 5 years ago. He quit paying all his credit cards (he had 4-5). Then probably about 6 months later he called each and started negotiating with them. He paid them all off by settling at about 30 cents or so on the dollar eventually.
Not sure if that approach would still work as times seem to have changed, but it worked for him.
Not sure if that approach would still work as times seem to have changed, but it worked for him.
Posted on 11/16/11 at 9:32 pm to JJLSU
quote:
I guess what's most frustrating is that I'm earning a pretty good income but there is nothing left over at the end of the month AND I'm not making up any lost ground on these debts.
Do you have a written monthly budget that you follow on a regular basis?
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