I’ve been in sky-high debts for the past 5 years. A friend referred me to try checking debt consolidation loans. Will they guarantee me of a debt-free and better life if I’ll get one for myself?
The only guarantee that you have of being debt free depends on you and your behavior. Although a debt consolidation loan can help you by giving you a lower interest rate and better terms, you honestly have to change your behavior if you are serious about getting and staying out of debt. The best way to do this is to get on a written budget or spending plan, save or make extra money and apply all of it towards debt reduction – by doing this, you can succeed.
My ex left me with a large credit card debt over $24,000. I have no way of ever paying it back. How long can a debt collector come after me or take me to court with this debt?
The Statute of Limitations (SOL) in South Carolina is 3 years (http://www.bcsalliance.com/y_debt_sol.html). Typically the SOL starts from the date of last activity or last payment. Making a payment can restart the SOL.
If you do get sued, be sure to respond to the summons and show up in court. Otherwise, the creditor will get a default judgment.
By the way, just so there’s no confusion, the SOL has nothing to do with the credit report reporting period which is 7 years per the FCRA. Folks often confuse and merge the SOL and reporting period. They are two completely different things.
I am currently enrolled in a reputable debt settlement company about a year into the 3 year process. One account has settled so far. One of my creditors is suing me, but the company is working hard to get it settled asap and I have responded to the court. I am not ignoring the summons just in case we can’t settle. I just want to know if anyone has gone through this process and cleaned up their debt for good. It is so stressful, but we were on the heels of bankruptcy and felt this was a good option for us to avoid bankruptcy.
My daughter has just finished "debt settlement" after 3 years but don’t try to buy anything involving credit because it is "SHOT". She wanted to buy a car, not new, but had to many rejections. I bought the car in my name over a year ago and she makes the payments to me and then I pay the bank.
My father had a saying long before there were credit cards: "If you can’t pay cash, you can’t afford it and you probably didn’t need it anyway"
I never charge anything that I can’t pay off in 2-3 payments. Preferably in one.
I have 10grand in credit card debt, plus about 25grand in car loan debt. I have heard that debt consolidation is actually worse for your credit than bankruptcy, is this true?
debt consolidation can mean two completely separate things: the first is getting a traditional bank loan to consolidate all your debts into one lower monthly payment. You need good credit to qualify. This does not damage your credit.
Debt consolidation also refers to a practice of trying to settle your debts for less (credit card debt only…not car loans). These firms have you deliberately default on your payments and trash your credit rating to settle for less. When you use such a firm, the monthly payment you make is going towards their settlement fees and to build a settlement account. Their fees are taken out first. Your credit cards will not be paid and will go into complete default during this process, which ruins your credit rating. This is deliberate so that they can attempt settlements for 50%. These firms have warm-fuzzy “feel good” ads which give the impression that they are doing your credit card companies a favor and that they’ll gladly work with them.
Many credit card card companies refuse to work with debt settlement firms. Your creditors are not obligated to take any settlement from anyone. You can never predict how your creditors will respond..they might settle at 50%…or they might serve you a summons, take you to court…and if they win, you could be looking at wage garnishment. If the process fails you can end up in a much worse financial situation where you’d have to file for Chapter 7 bankruptcy.
People state that a debt settlement company helps people in all their debt issues. What kind of debt settlement companies should we prefer?
Ewan,
DEBT SETTLEMENT IS NEVER YOUR BEST OPTION for eliminating credit card or other unsecured debt. Even if you happen to find a legitimate debt settlement company, there are some serious consequences and drawbacks, including…
- Short and long term damage to your credit
- NO GUARANTEE of results
- Very high and confusing fees
- Front-loaded fee schedules that delay progress in settling your debts, and
- Tax Implications (you will most likely receive a 1099 from your creditors for the amount of the balance reduction, which means you’ll have additional income taxes due)
If you need assistance getting out of debt, a superior alternative to traditional debt settlement is Debt Resolution. Debt Resolution offers all of the benefits of debt settlement, but also either eliminates or significantly reduces the negative aspects mentioned above. Unlike debt settlement (which relies solely on the level of your delinquency to negotiate settlements), Debt Resolution leverages good faith debt laws to both challenge the amount of the debt owed, and provide legal protections for the borrower. Features include:
- Eliminate 55% of your unsecured debt (guaranteed in writing). Try asking a debt settlement company for a guarantee.
- Cut your monthly payments in half (or less)
- No interest charges
- No negative tax consequences (you won’t get a 1099 from the creditor)
As an example, if you owes $12,000 in credit card debt, 45% of that is $5,400. If you can afford $600 per month, you can be out of debt in just 9 months ($5,400 / $600 per month). If you can only afford $200 per month, you can be out of debt in 27 months ($5,400 / $200 per month), and so on… The only other cost associated with the program is a one-time enrollment fee of $500 to administer the paperwork, get set up in the system, and establish the trust account from which the creditors will be paid.
That’s it. There are no other costs or fees. Just a one-time $500 enrollment fee and 45% of the current balance, which can be spread over as many as 45 months, depending on what you can afford.
As for those well-intentioned contributors on the forum who suggest that you can do a debt settlement yourself… Well, they’re right, you can do a debt settlement yourself. But guess what? You’re most likely not going to settle your debt for less than 45% of the balance, which is the contractually guaranteed amount if you enroll in Debt Resolution. And guess what else? Unless you are familiar with the good faith debt laws and the laws of your state that govern credit card agreements – and you know how to leverage those laws to have the principal reduction considered a correction of the amount owed rather than a forgiveness of debt, you’re going to receive a 1099 for the amount forgiven, and you’ll have to pay taxes on it.
And what about suggestions of help through CCCS? Well, you can go that way if you want to pay 3 times as much and have the process take 2-3 times longer. You see, they’re closely aligned with the credit card companies, and their goal is to get you to pay back as much as possible. Let’s use the example above where you owe $12,000, and can afford $200 per month. With Debt Resolution, you’ll be debt-free in 27 months. With consumer credit counseling ??? Let’s say they reduce your interest rates to just 9.9%. If you were able to pay the $200 per month, it would take you 83 months to complete the program, and you would have paid $16,630 (instead of $5,400 !!!). But it’s very likely that they would limit your term to just 5 years (60 months), in which case you would have to pay $254/month for 5 years (total of $15,262).
Quick question: Which sounds better to you… $5,400 and be out of debt in 27 months (at just $200 per month) OR $15,262 and be out of debt in 60 months (at $254 per month)?
But remember… DEBT RESOLUTION IS NOT THE SAME AS DEBT SETTLEMENT, and you CANNOT get these benefits from a debt settlement company.. Debt Resolution is a unique, proprietary process developed and perfected over many years by a former Deputy Attorney General of California with over 40 years of legal experience, including more than 15 years specializing in resolving debt.
For more information on Debt Resolution, you can visit:
http://www.BetterThanDebtSettlement.com
Im contemplating using them for my credit card debt, wondering how past experiences have been
Hi,
I used ”National Relief” to settle my debt and avoid bankruptcy. They managed to reduce my debt up to 58% and improve my credit score. It’s legitimate . I came across this company on NBC News Special Edition. Check it out here:
http://NationalRelief.notlong.com
What company would you suggest for a debt consolidation? People easy to deal with and with good and competitive rates. Thanks!
The answer is NO COMPANY. All any debt consolidation firm does is collect money from you, pay some of it to your creditors and keep the rest. If you do it yourself, 100 percent of the money goes to the creditors. As far as negotiating reductions and lump sum payments or payment plans, you are better doing that yourself as well. That you do not pay $1000s in fees to some debt consolidation firm before they settle one debt. Try creditinfocenter.com or credit-card-debt-survival.com for more info.
Maybe you’ve seen the ads: go to a debt settlement company, cut your debts in half. Is it for real?
Duration : 0:1:43
Before filing for bankruptcy, try seeking credit counseling. Learn about the repercussions of bankruptcy with tips from a consumer credit counselor in this free video on personal finance management.
Expert: Maria Enomoto
Contact: www.gotdebt.org
Bio: Maria Enomoto works as a credit counselor for Consumer Credit Counseling services in San Jose, California.
Filmmaker: Bing Hu
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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
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