topic Re: What do you guys and gals think? in General Credit Topics

What do you guys and gals think?

Anonymous — Fri, 25 Jul 2008 15:50:17 GMT

Ok. In my earlier post, I was telling you all about my DH's CCCS dilema. Here's a scenario I want your input on:

Currently, DH owes over $50K, unsecured debt.

I spoke with a debt settlement company this morning. If he were to go that way, his payments would be $765 for 3 years - currently he is paying $1065 via CCCS - three and a half years to go.

$765 x 36= $27,540

$1065 x 42= $44,730

Savings= $17,190

Points to consider:

He cannot file BK, not 13, not 7.

My credit is fair. Would be GREATLY improved if I put the $300 difference between CCCS and debt settlement payment towards MY debt. I make enough to buy a house by myself if we choose to do so.

His current FICOs are in the 520 range.

That $1065 is extremely hard to make each month.

Two mortgages and a car payment would continue to report as "Pays as agrees".

I know you are opposed to debt settlement, but it seems we are between a rock and a hard place. Since he can't do a BK, would this be a terrible plan?

Thanks in advance for your input. I have nothing but respect foryour opinions!

~tex

Message Edited by TexMontana on 07-25-2008 08:50 AM

Re: What do you guys and gals think?

Anonymous — Fri, 25 Jul 2008 16:07:43 GMT

I won't offer advice as to which way to go. But, I will say this.

I believe sometimes you have to not think about it from a credit point of view and think about it from a financial point of view.

Re: What do you guys and gals think?

Anonymous — Fri, 25 Jul 2008 19:05:13 GMT

sidewinder wrote:
I won't offer advice as to which way to go. But, I will say this.

I believe sometimes you have to not think about it from a credit point of view and think about it from a financial point of view.

I guess that's really the way I'm looking at it. I'm just hoping it's not some colossal mistake!

Re: What do you guys and gals think?

Anonymous — Fri, 25 Jul 2008 19:33:38 GMT

If you're treading water as things stand now, your credit problems aren't going to improve because the financial circumstances that brought them about are not improving.

In the long run, you have to find an answer that increases income and/or decreases expenses. Debt management may be that path for you.

Re: What do you guys and gals think?

granny031350 — Fri, 25 Jul 2008 19:36:28 GMT

I would like you to be wary of the debt settlement services. (This is NOT the CCCS service or DMP some are in here) They hold your money until you have a significant amount built up and then they offer the settlements. In the meantime, you are garnering lates on your credit report along with the phone calls and threats of being sued.

I know that you indicated no BK but on the forum I frequent, many end up there after going with a debt settlement company because it put them in worse shape than before. (added on penalties, late fees, over limit fees, and being sued)

I would say here, Let the Buyer Beware!

Message Edited by granny031350 on 07-25-2008 03:36 PM

Re: What do you guys and gals think?

Anonymous — Fri, 25 Jul 2008 19:44:27 GMT

TheNewWorldMan wrote:
If you're treading water as things stand now, your credit problems aren't going to improve because the financial circumstances that brought them about are not improving.

In the long run, you have to find an answer that increases income and/or decreases expenses. Debt management may be that path for you.

Increase Income:

We are both working 70-75 hours a week. Can't do much more.

Decrease expenses:

We sold our house, moved 15 miles closer to work, are renting a small apartment, not eating out, haven't spent a dime on anything other than rent, utilities, medical expenses, groceries, car payment, gas (ugh!) and the credit card bills (CCCS).

The financial circumstances have changed - two extremely long and expen$ive divorces are over and done with, and the over-priced house has been sold. My question is simply: Is debt settlement EVER a good idea?

Re: What do you guys and gals think?

haulingthescoreup — Fri, 25 Jul 2008 22:45:09 GMT

I'd heed the words of granny031350. While many DMP's are run as sort of a public service, DNP/DSP's are all about making money for themselves. Their profit comes before your well-being, either financial or credit.

They find their customers from those who are desperate and will grab for anything that promises to keep them afloat. That leaves things wide open for abuse.

I know you've researched the hell out of this, but there's got to be something better. Here's what the FTC has to say on its website:

Debt negotiation differs greatly from credit counseling and DMPs. It can be very risky, and have a long term negative impact on your credit report and, in turn, your ability to get credit. That’s why many states have laws regulating debt negotiation companies and the services they offer. Contact your state Attorney General for more information.....

....Just because a debt negotiation company describes itself as a “nonprofit” organization, there’s no guarantee that the services they offer are legitimate. There also is no guarantee that a creditor will accept partial payment of a legitimate debt. In fact, if you stop making payments on a credit card, late fees and interest usually are added to the debt each month. If you exceed your credit limit, additional fees and charges also can be added. This can cause your original debt to double or triple. What’s more, most debt negotiation companies charge consumers substantial fees for their services, including a fee to establish the account with the debt negotiator, a monthly service fee, and a final fee of a percentage of the money you’ve supposedly saved.

While creditors have no obligation to agree to negotiate the amount a consumer owes, they have a legal obligation to provide accurate information to the credit reporting agencies, including your failure to make monthly payments. That can result in a negative entry on your credit report. And in certain situations, creditors may have the right to sue you to recover the money you owe. In some instances, when creditors win a lawsuit, they have the right to garnish your wages or put a lien on your home. Finally, the Internal Revenue Service may consider any amount of forgiven debt to be taxable income.

FTC article: Knee Deep in Debt

We really shouldn't even be discussing this here, because DNP's/DSP's are so grossly unethical, but I know that you feel that your back is up against the wall. I really urge the two of you to go with a good DMP and just settle in for the long haul. I'm just afraid that a DNP/DSP would be a nuclear bomb on your financial and credit lives, destroying everything for a long, long time.

Re: What do you guys and gals think?

Anonymous — Mon, 28 Jul 2008 20:18:23 GMT

Thanks, everyone who chimed in.

A major turn of events this weekend.

His DAD suggested that he file BK. We thought for sure doing so would effectively end his relationship with his parents, but it looks like they can deal with it after all. I guess we'll go ahead with a work-out meeting with a BK attorney and see the difference in his payments - CH 13 vs CCCS. Fortunately, I won't have to file, so at least one of us will have decent credit. And most importantly, he may have finances that are manageable!!!

Re: What do you guys and gals think?

granny031350 — Mon, 28 Jul 2008 22:31:16 GMT

a year of ontime payments to the trustee and you can start rebuilding his credit with secured cards etc. A chapter 13 isn't too bad and he may only be in it for 3 years which is nice

Re: What do you guys and gals think?

Anonymous — Tue, 29 Jul 2008 04:11:03 GMT

With all due respect, Tex, what does his dad have to do with it? Unless his dad co-signed for a loan or other debt with your hubby and faces having to pay it alone, I don't get it!!

Personally, I think you've obviously done all you can possibly do to help your situation. You're breaking your patootie to do the right thing and you've made MANY sacrifices. I don't know what else your FIL expects you guys to do!!

I don't have any other answers for you ... but I do have prayers and encouragement to more than spare!!

I will be crossing my fingers, toes and eyeballs for you ... and saying prayers for you both!!

{{{{{{{{{{{{{{Hugs!!!}}}}}}}}}}}}

Re: What do you guys and gals think?

fishbjc — Tue, 29 Jul 2008 14:06:34 GMT

Wonderin: I think Tex's FIL employes her DH.

Tex: As a parent, I want what's best for my child. If he ever has to file BK...after busting his rear like you two...I'm behind him 100%

Go speak to that BK Attorney & don't feel bad about it. Let us know how the meeting goes.

Besides financial reasons...you also have to sleep at night. My brother filed bk on 300k...and his credit is beginning to look really good now!

Re: What do you guys and gals think?

Anonymous — Tue, 29 Jul 2008 14:44:28 GMT

fishbjc wrote:
Wonderin: I think Tex's FIL employes her DH.

Tex: As a parent, I want what's best for my child. If he ever has to file BK...after busting his rear like you two...I'm behind him 100%

Go speak to that BK Attorney & don't feel bad about it. Let us know how the meeting goes.

Besides financial reasons...you also have to sleep at night. My brother filed bk on 300k...and his credit is beginning to look really good now!

You nailed it. He's an only child with (in my opinion) invasive and controlling parents. Anything he does that does not meet their expextations, he catches hell for it. I'm really lucky - my parents pretty much embrace the "unconditional love" thing for their kids.

Thanks to everyone for your well wishes and input. Believe me, neither one of us takes the BK lightly. We really have busted our rears - not complaining!!! thankful we have good enough health and opportunities to earn extra $$, but like you say - I do need some sleep, and some time to spend with my DH and my son, who's 17 and won't be home a whole lot longer.

I appreciate that you took time time post your advice and opinions!!

tex