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I need advice on Debt Settlement Companies

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Anonymous
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I need advice on Debt Settlement Companies

My wife and I have about $50,000 in credit card debt.  We had decent jobs, but were living pay check to pay check and barely making the minimum payments.  We were getting nowhere!  I found a company that helped us lower our percentages on all our credit cards, but the payment was still the same.  We continued the program for five months and saw where our balances were going down faster, but the payment was killing us.  We just could not continue the program.  We were on our way to bankruptcy in which we did not want to do.  I called the company and said the program was working, but not helping us due to the high payment.  We did not have any money to live on after all our bills were paid, so we had to do something about the payment.  The company referred us to their debt settlement company.  After discussing this option, the company lowered my payment $750 less a month than we were paying.  They looked at what we could afford each month for each of our creditors by what we were bringing in monthly.  Of course what they were offering to each creditor a month was much lower than the minimum payment that the creditor wanted.  Most of the creditors would not accept the payment.  So where would the money go that we sent to Freedom Point?  The money went into our account.  The money would build up until one of the creditors decided to take the offer.  Most of the creditors want a lump sum.  We have settled on three accounts in a three year period, but we have about nine more accounts.  It has taken a good while to build that up since Freedom Point has to charge us $54 a month due to their work and mailouts to all the creditors.  So this is how it works!  Here is my question!
 
I have recently moved and have a much better job making about $26,000 more a year than I have over the last ten years.  My FICO score has dropped to 500.  I am trying to build my credit back up, but due to a bad history of paying my bills it has dropped.  What do I do now?  Do I put more money in my account each month and try to settle as quickly as possible?  After I settle with several of them, get off the program and start paying the rest of them by myself?
 
I need some answers!  I would appreciate your comments!    
Message 1 of 3
2 REPLIES 2
Anonymous
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Re: I need advice on Debt Settlement Companies

I was in the same situation exactly a year ago and didn't know what to do. Only thing was that I had debt of $17K. I kept thinking about bankruptcy or debt settlement companies but didn't up doing it.
 
I spoke with couple of my friends about my situation and since they knew me for like 5 years or so, they trusted me and said they will help me get out of this. So, pretty much, 5 of my friends pushed me to talk to each of my creditors and get this over with. They all gave me nearly $10K in personal loans combined. I called up each of the creditors on my own and get settlements down to a total of $11K or so. Last august was when i got completely debt free. And I have paid close to a $1k a month to each of my friends to return the loan and i am almost done with that as well.
 
So, my point here is that see if you can find friends or family to help you out. Then go ahead and call each of the creditors and get a settlement amount, as low as you can. One of my creditors agreed to accept 45 cents on a dollar. But I have heard many other people settle for even less than that.
 
Then, just workout a payment plan with your friends and pay them back over time. Good thing about that is that your are not paying interest. So, your balance will decrease and decrease over time.
 
Hope this helps. Good luck!
Message 2 of 3
Anonymous
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Re: I need advice on Debt Settlement Companies



bigmoney wrote:
My wife and I have about $50,000 in credit card debt.
...
I found a company that helped us lower our percentages on all our credit cards
...
The company referred us to their debt settlement company
...
I have recently moved and have a much better job making about $26,000 more a year

Is the $50K in CC debt still accuring interest?
Are all the accounts closed or do you have any open CCs in good standing?
Do you own a home or own a car outright?
Post all the CCCs, CLs, balances and APRs. Also post how the CC TLs are reporting to the CRAs.
How much do you have to put towards the debt each month? Just the $750?
 
I am not one to recommend BK, but my initial gut feel says you are a prime candidate for a BK. As such, I'd say do a little reading here.
 


Message Edited by Noah_Bodie on 07-23-2007 02:41 PM
Message 3 of 3
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