Archive for October, 2009
I recently switched jobs making significantly less money. Now I am past due with bills and am getting some pretty rude calls from creditors. I want to pay them but am having a hard time. I have been seeing commercials about debt settlement and needed some help deciding who to go through. I have a little less than $12,000 to pay off. Please site sources when you can and THANKS ahead of time!
The best thing to do is get a copy of "The Total Money Makeover" by Dave Ramsey.
Get yourself a written budget, where everything you make next month is spent on paper this month.
Nobody gets a dime until the essentials are paid for:
Food, shelter, utilites, transportation.
Then see what you can cut. Food = Beans & Rice. No restaruants, no steaks, etc.
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To quote from Dave Ramsey’s web site:
History also teaches us that debt wasn’t always a way of life. In fact, three of the biggest lenders today were founded by people who hated debt. Sears now makes more money on credit than on the sale of merchandise. They are not a store; they are a lender with some stuff out front. However, in 1910 the Sears catalog stated, "Buying on Credit is Folly." J. C. Penney department stores make millions annually on their plastic, but their founder was nicknamed James "Cash" Penney because he detested the use of debt.
Henry Ford thought debt was a lazy man’s method to purchase items, and his philosophy was so ingrained in Ford Motor Company that Ford didn’t offer financing until 10 years after General Motors did. Now, of course, Ford Motor credit is one of the most profitable of Ford Motor’s operations. The old school saw the folly of debt; the new school saw the opportunity to take advantage of the consumer with debt. "
It actually helped improve mine and decreased my debt by 20,000 since ‘02.
I’ve done SOME research but I’m still unsure..
I’ve visited with one company…you completely stop making payments to your creditors. After 3 months, they(credit counselors) step in working with the creditors to lower your payments and interest rate. BUT, you have to stop paying them for 3 months in order to "build a case."
I don’t want to hurt my already dying credit rate.
Are there any other type of credit counseling services that DON’T require you to hurt your already damaged credit?
I’m not behind on any payments yet.
I’m still paying the minimum if not more every month before the due date.
I’m just trying to find something where I can have my payments all lumped into one large sum…and instead of trying to divvy it out amongst the different credit card companies…have it done for me.
(oh…and of course lower the interest rates)
Go to this site: http://www.nfcc.org/ . This is Consumer Credit Counseling Service (CCCS), a legit non-profit company that offers free credit counseling. They also have a debt management program available, if you qualify, for no fee. They can look at your financial situation and advise you how to proceed.
You absolutely do not want to use a company that lets your debts go for three months and then negotiates via threat of bankruptcy. That will absolutely trash your credit. Also, they will be taking their fees up front during that three months. It is also likely that your creditors won’t agree and will just sue you.
If you go into any debt management program, it will affect your credit score just like a bankruptcy.
You can work at paying off your debt by yourself. Make a strict budget. Take every penny out of that budget and put it on the highest interest rate debt, while making minimum payments on the rest. When the highest rate is paid, move to the next till they are all paid off.
This will take 2 or 3 years but you will have a good payment history.
I am currently on a debt management plan with a third party company whom i pay £300 per month towards clearing my debts. This £300 gets split to pay off my creditors.. Just out of interest what would my creditors/debt management company do if i was to miss one of these monthly payments? What would the consequences be if i were to miss a payment?
You need to call them (the debt management company) and let them know. If this is a matter of the due date, sometimes you have the option of paying creditors directly about ten days later than your consolidated payment would be due, or making a rush payment. But if you actually need to miss a month. . .
Often it doesn’t matter at all–the creditor has to notice the missed payment and have a policy to immediately take action due to your past delinquency. But missing a payment means that the nice deal they made with your creditors has been broken by you and the creditors have the choice to cancel the agreement. Normally, they will let you make the deal again and get back on the program, but they don’t have to. Also, that won’t happen automatically. If your creditor cancels your agreement, you will not get notice, your interest rates will go up, and minimum payments and late charges will be back in the picture. You’ll have to have the debt managers make the deal with your creditors again, and the creditors could opt for different terms to the deal this time.
I am looking for a way to get a handle on my debt. I have explored a few different options, but my credit is too bad to get any type of loan. I just got a "quote" from a debt relief company to help resolve my issues, but I am a little wary because I have heard a lot of bad things about these companies. Is there anyone who is currently (or in the past) worked successfully with a non-profit debt counseling service? If so, who was it and how was your experience? Any other advice that can be offered is greatly appreciated.
CCCS (Consumer Credit Counseling Service) is a non-profit service that is partially funded by the credit card industry. They can put you on a payment plan and reduce or even eliminate interest…They require you to cut up your cards. Note: They DO NOT negotiate settlements…just reduced interest payment. FYI: If you go on their debt program, this will be noted on your credit files and getting any mortgage or car loans will be difficult or impossible while on their program.
STAY AWAY form any debt counseling service you see advertised on TV…regardless of how nice their "feel good" ads seem.
I have two credit cards that I have used over 5 years ago and never paid back. The total of the two cards FIVE YEARS AGO was $1000. Of course, by now, it should be close to $3000 because of all the interests.
What does debt consolidation do? More importantly, can it REALLY remove or reduce the interest that built up over the last 5 years?
When doing a search for debt consolidation services, I get THOUSANDS of results. Which debt consolidation services are better?
Detailed answers would be appreciated.
Update: Am I correct to assume that if I leave the debt as it is, I can have it completely wiped off my credit card two years from now as if it never happened?
Hi, Jimmy:
First, I already answered a related question, so I’ve copied that answer below after the dashes.
If your number one objective is to simply improve your credit, you could just wait it out for another 2 years until the debt is 7 years old. You can then ask for it to be removed from your credit report. If this is your objective, then don’t pay the debt. Records on your credit report are good from 7 years of last transaction so any payments or charges you make resets that 7-year clock.
Personally, I’ve never used a debt consolidation company because I’ve felt capable of trying the same tactics myself. Granted, these companies are professionals and may get special "deals" and privileges that I wouldn’t get, but I’ve still been pretty pleased with my own results.
Before using a debt consolidation company, I recommend trying your own hand at it. Contact your creditors. Before you do, determine how much you can afford to pay in a monthly payment. Even better, if you have some money saved up as a lump sum, you can try to pay them off in a couple of chunks. The more money you can give them at once, the better your negotiating power.
If you’re in collections, ask the creditors by how much they’ll reduce the total amount owed if you pay now/in 30 days/in 60 days/within a year.
If you’re not in collections yet, ask the creditors how much they’ll reduce your total interest. Some companies (e.g. Discover used to do this) will even suspend interest entirely while you’re in re-payment. Of course, you can’t use the credit card during that time, but you’re saving money and salvaging your credit.
Good luck!
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There are several benefits to credit card consolidation:
- Convenience (only one or two payments)
- Easier to manage (less likely to forget a bill!)
- Possibly a lower combined interest rate
Generally, when companies help you by consolidating your credit cards, they contact the credit card companies on your behalf and try to negotiate a lower interest rate (you can do this on your own, by the way). Then, the companies can take one of several methods for that single consolidated payment. Options include…
- Financing your debt themselves and then THEY pay your creditors
- Helping you find a financier to consolidate your debt
- Having you roll all of your debt under one of your existing accounts and pay off the others
As such, credit card consolidation does not affect your credit rating. In fact, the results of consolidation are often positive simply because it’s easier to manage and you may pay less interest.
All this being said, I’ve never used a consolidation agency because I never wanted to pay the fees. Instead, I contacted my creditors myself and asked for the best possible interest rate they could give me, and asked what kind of arrangements I could make to manage debt. In general, they all worked with me.
By the way, here’s one thing to consider when paying off your debt: Bad credit falls off your credit report 7-10 years after your last transaction. So, if you have a liability that is 6 years and 10 months old, carefully consider whether you pay it off or not. If you touch that account at all, even if it’s to pay it off, suddenly that 7-year period is renewed. So, the choice you have to make is: Do you want something that was bad and is now paid on your credit report for another 7 years, or do you just want it gone entirely?
There are some ethical questions there, too (e.g. if the debt was yours and you were above 18 at the time, you should pay the debt to be ethical). These are questions that only you can answer. But, when working with a consolidation company, make sure they only consolidate the accounts you want them to touch.
Good luck.
I live in the State of Georgia and am being sued over an old credit card that I defaulted on. It has been more than 4 years but less than 6 years since the date of default, so depending on whether credit card debt is considered an open account or a written contract in the State of Georgia, the Statute of Limitations may or may not apply. The Staute of Limitations is 4 years for open accounts and 6 years for written contracts. Does anyone know for certain which type applies for credit card debt in Georgia? The account is with Citibank MasterCard and was opened in the late 80’s or early 90’s. Thanks.
Spiff! Man you are starting to disappoint me something terrible!
The definition of a "written" contact is one where all of the payment issues are completely spelled out. The monthly payments, the timeframe, everything.
An "open" or "revolving" credit line does not fall into this catagory because the terms of the agreement change every month. One month you owe $200, and the next you owe $400…..and each month you have a varying amount of payment. You can pay it off, and then run it right back up again….that’s why they call it a ‘revolving" line of credit.
This is also clearly spelled out in the US UCC codes, and many states specifically label credit card debts as open accounts.
Georgia is one state that specifically labels credit cards as NOT being a written contract. Please refer to the link below.
Once again….poor answers with no source of information cause a lot of damage here on Yahoo. If they don’t provide you with a source for further examination it’s best not to believe it.
Debt settlement is an extreme solution suitable for serious debt issues. Learn how it works in this debt settlement video with Brad Stroh of http://www.bills.com
Debt settlement is the process of negotiating with creditors to accept about half of the total debt you owe. In order to qualify, you must be delinquent on your payments and will probably face aggressive collection attempts. This solution is only appropriate for serious debts with no other solutions. If choose this option, look for a reputable debt settlement company to ensure your debt is settled fairly.
Duration : 0:1:55
http://www.caprocessing.com – Video promoting the debt management services of CA-based CAPC Debt Management. Get a free debt quote online.
Duration : 0:1:35
A non-profit debt consolidation company will assist people who need help at a low payment. Get financial counseling from a non-profit debt consolidation company with help from a business analyst in this free video on financial planning and debt management.
Expert: Terry Kuykendall
Bio: Terry Kuykendall is currently a budget analyst for the military in Washington. She is an accountant who has worked at firms helping people deal with personal and business debt.
Filmmaker: stephen kuykendall
Duration : 0:0:49