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Bankruptcy or Debt Settlement Program??? Please Help

nannieto13
New Visitor

Re: Bankruptcy or Debt Settlement Program??? Please Help

Hi,
I used a debt settlement program 3 years ago, it was the WORST thing I ever did. They were collecting my money, they told me to stop paying my cards, my credit is ruined and i had credit card companies calling me all hours of the day & night. I ended up negotiating my own settlements with the card companies, losing all the money i paid to the debt settlement company (it was their fee for services rendered) NOT!!!!! Plus I ended up PAYING INCOME TAX ON ALL THE MONEY THAT WAS WRITTEN OFF BY THE CREDIT CARD COMPANIES! I used Stellar Debt Solutions, I hope yo are not using them, they are cheats. My sister in law had the same problem with them. Please contact your credit card companies directly asap and try to arrange a payment schedule you both can live with, stop paying money immediately to the debt company, they will not help you! Good luck! It has taken me awhile to get straightened out, if there is way to refinance your home, or get a loan to pay them off, do so. Don't let the debt consolidator steal your hard earned money.
Message 41 of 60
paperlade1
Established Member

Re: Bankruptcy or Debt Settlement Program??? Please Help

i've read this term reaffirm a lot.  Can you tell me exactly what it means and what it entails?  I'm probably going to have to file Ch 7.  I didn't discuss the house issue with the attorney, only the fact that there's no equity.  I want to keep my house.  Payments are current.  Does this mean I'll have to reaffirm? afterhours, so i can't call and ask herSmiley Happy
Message 42 of 60
blindsyd
New Visitor

Re: Bankruptcy or Debt Settlement Program??? Please Help

I actually enrolled in a debt negotiation/settlement program (Arbitronix) back in the beginning of '04.  I was finished with the program (with all enrolled credit balances settled/paid) by the end of '05.  They estimated it would take 2 years, and it pretty much did.  My credit scores TANKED (well below 500) - as they would when you stop paying your bills... I did, however, maintain my American Express account and my primary credit union credit card (where I held my checking account) open and in good standing throughout the entire program. 
 
Once all accounts were settled/paid, I went about the process of pulling all 3 credit reports and began to clean them up, challenging anything and everything.  By the time I was looking to purchase a home in early '06, I had brought my scores up to about 585 - mind you, this is while having a couple of remaining credit accounts current and in good standing.  I was able to take and advance on my salary in order to bring my existing credit balances down to 50% of their limits, and with that final step, I had my scores up over 600.  My mid was 619, got a waiver for my home loan and i've been in my house since May'06.  Now, my rates aren't anything to get excited over (7.8% & 11.2%) - gosh, it hurts to just TYPE those numbers!  BUT - I got 100% financing and was able to buy my first home, all by myself, no co-signer (at 33 in the Bay Area)...
 
Now, my advice to you is to keep a couple of accounts current - if anything they may be your only avenue for additional credit once you are done w/ the program and trying ot rebuild your history.  ALSO - understand that you will want to keep track of the AMOUNTS OF DEBT THAT AREN'T PAID (written off/settled) because when tax time comes, you will have to count that as income.  This was a detail I was NOT aware of when I got into the program.  Lastly - be sure to keep all of your paperwork for the credit accounts you enroll and all correspondence... you never know when it's going to come in handy for disputes or back up when cleaning up your credit files with the 3 credit agencies.
 
Best of luck to you - hang in there and bite the bullet... you can get things paid and behind you and then you can work diligently to restore your credit.  I am now into the mid-680's! I can be done!!
 
btw - sorry to be so long-winded...
Message 43 of 60
fishbjc
Senior Contributor

Re: Bankruptcy or Debt Settlement Program??? Please Help

Tracy:  I don't know who you used, but my accounts all say OK.  There are NO lates showing..  Fico does not hold CCCS against you.
 
Did you READ your contract before signing?  You're supposed to be checking your credit report quarterly and watching all statements.
 
FATDUMBHAPPY:  I totally disagree with you about BofA.  They recommended to me a CCCS, and they've been awesome.  My interest on CC was reduced to 4%, my signature loan 13%.  Due to an error by cccs over a $2 short payment, they intervened and BofA removed all of the lates including the one that was my error!  Instead of charging me an addl $2/monthly, the CCCS took it from the monthly maintenance fee.
 
Maybe the difference is the fact that I chose one of their recommended agents.  I pay $17/monthly as a maintenance fee, but that is negotiable.  This CCCS is also BBB.
 
 


Message Edited by fishbjc on 02-28-2008 07:40 PM
Message 44 of 60
demi
Established Contributor

Re: Bankruptcy or Debt Settlement Program??? Please Help

fishjb....have to agree. MBNA (now of course, B of A) are the ones who recommended Take Charge America to me. Like I said, they have been excellent. I think there must be a difference between "debt settlement" and "Debt management"...I am paying every dime I owed my companies, just have reduced interest rates and managed payments. I guess the moral is CHECK OUT WHO YOU ARE USING !!!! I am sure there are a lot of scam artists out there. 3 years, 3 months into it, about 6 to go, and I am in the middle of buying a house. Scores all in the high 600's. Best thing I ever did. If you were in the position of being able to pay, yes, negotiating with your cards would be better....but I was recovering from major back surgery, no managing my bills well, and it ended up reducing my monthly payments. AWESOME service...and they educate you. NO credit cards while on program, and any new ones may invalidate the agreement...you have to learn to live on what you make.

Starting Score: EQ 679, TU 697
Current Score: EQ 680, TU 672
Goal Score: EQ 720, TU 720


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Message 45 of 60
FHAInfoCenter
New Member

Re: Bankruptcy or Debt Settlement Program??? Please Help

Debt Settlement and Debt Management are two different things. In debt settlement they want you to be as late as possible so they can settle for the least amount. This really really tanks your credit and takes a long time to recover. Debt management (or CCCS in some cases), has you PAY your creditors, just with less interest and in a manageable way...if you get a "good" debt management company it isn't to bad. And for those that say CCCS doesn't affect your credit you are right and wrong. While it may not impact your score, most mortgage lenders treat a CCCS on the report as kind of like a CH13 BK.
FHA Mortgage Expert
Message 46 of 60
FHAInfoCenter
New Member

Re: Bankruptcy or Debt Settlement Program??? Please Help

Also even though some of you have had a success with debt settlement that is far a few from what I have seen as a mortgage lender. I have reviewed over 5000 credit reports in my life and can tell you that if you are NOT behind going into a BK, your scores will not fall all that much and when you come out you will be on a fast track. (now I understand it is rare to not be behind and want to file BK, but it has and can happen)

blindsyd, depending on the size of your home loan, you may have been better off just filing a Chapter 7 in early 2004, probably would have discharged mid 2004...so mid 2006 you would have been open to qualifying for quite a few mortgage programs, some better than what you did receive. Being in the Bay are this probably may not have come into mattering, but you could have gotten an FHA loan and the rate would have been in the 6's somewhere for ONE loan 30 year fixed (now why it may not matter is your loan size may be above the FHA loan limits in your area, but for others this may be a good example of why BK for those that need it AND qualify is not as horrible as many make it out to be)

(*edited*)

Message Edited by haulingthescoreup on 03-02-2008 05:53 AM
FHA Mortgage Expert
Message 47 of 60
startingover40
New Member

Re: Bankruptcy or Debt Settlement Program??? Please Help

I used ACCCS (American Consumer Credit Counseling Service). They are a Non-profit agency and only charge $9 a month after a small joining fee, plus they send you newsletters with very helpful information.  My credit score has gone up since getting help from ACCCS and my interest rate is 8% from 23%.  I highly recommend them.
Message 48 of 60
demi
Established Contributor

Re: Bankruptcy or Debt Settlement Program??? Please Help

That is something I ment to mention....I was behind on a lot of my cards going into dmp....but if I had been able to maintain them as current, I probably would have tried to negotiate lower payments.  My decision to go into dmp was probably 3 to 4 years into an increasing bad debt situation.  I never felt bankruptcy was an option, most of the credit problems were just bad spending habits...then medical on top of it.  Its a personal decision.  My dmp takes out the money on the first day of the month and distributes to all within 5 days, and the only time one has ever been late was because of a moving payment date on a Chase Card...I called and got the payment date changed to later in the month.  Was not dinged for being late because the previous months payment was well over the minimum.

Starting Score: EQ 679, TU 697
Current Score: EQ 680, TU 672
Goal Score: EQ 720, TU 720


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Message 49 of 60
EricRemy
New Member

Re: Bankruptcy or Debt Settlement Program??? Please Help

I highly advise purchasing a book called "Your Credit Score" by Liz Pulliam Weston. It is a short book, but well organized, easy to read and surprisingly interesting. Here is a paragraph from her book that addresses your issue. It was written by an individual that sent her an e-mail.
 
"A little over five years ago, I contacted AmeriDebt to see if they could lower the interest rates on my credit cards. Within 30 minutes, I had received a callback from a representative from AmeriDebt stating that they had lowered the rates on my credit cards. I was amazed at the speed in which they had done this. I started paying them $500 a month, and they were to disburse the funds to my creditors. [After five months], they had $2,500 of my money that the creditors should have received. This sent my credit into a tailspin. I was not in trouble with my creditors and had never missed a payment of any kind until I started dealing with [this company]. The credit card companies were calling, and they stated that they had no record of AmeriDebt working on my behalf. Bottom line: My credit was now ruined. I went from a 750 Beacon score to a 250 within four months. I paid everyone off immediately, and it has taken almost five years to get my credit score to just below 700. The funny part is that AmeriDebt decided to finally pay out that $2,500 to my creditors after I [had] already paid them off."
 
I am not suggesting you will fall vicitim to this type of thing, but I do want to suggest that you remain on top of things. Don't ever fully trust anyone but yourself to keep a genuine interest in your credit score. Remember that anytime you are being offered a service, ask yourself "What do they have to gain, and what do I have to lose?" If they really can help, then great. But don't take their word for what they say they will do. Keep tabs and check up on them, because you're the one with something to lose. Not them.
 
 
Message 50 of 60
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