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Debt Consolidation (Not loan)

Frequent Contributor

Debt Consolidation (Not loan)

Hey all,

I have recently had to really run up my credit cards in the last 14 months due ot an ill fated business venture. (Learned that lesson)  Long story short, I rang up about 100K in credit card debts. (payroll ,expenses)

 

Now I'm in a position where I'm waiting for the product to finally make some money - but under a mountain of high apr bills.

 

I got an offer from a company called Tweed Financial which dovetailed to a company called Finance Solutions.  They offered to consolidate all my debt to a singular payment, at 0% apr, and slowly pay off all the creditors over the next 42 months.  The caveats are that the accounts get closed - and the balances report (as they are paid down).  

I worry about how bad this hurts my credit (i still have close to a 700 even with 65% util)  And more importantly, how badly does it hurt my relationship with creditors?

I have some really great triple A cards and it hurts to close them, and hurts more to think i couldn't get an account with them again.  The company assures me I'd be in good standing with the creditor, but when i asked about keeping my Amex Plat and closing my BCE - he said they may actually close out the plat too, just because, which would be a huge shame.

Any advice would be most appreciated!



CK EQ: 730 / CK TU: 735 / EXP FICO: 721 / EX Vantage: 793 / Total Exposure: 112K
Message 1 of 10
9 REPLIES
Frequent Contributor

Re: Debt Consolidation (Not loan)

I'm not sure what the answer is here, but if it was me. Depending on the product, I think I would look for an investor to get you back solvent. There is a lot of venture money around if you have the right product and right message even if you are pre-revenue which it sounds like you are.

Started Rebuild 4/2018: EX 616| TU 604| EQ 621

Current 11/15/18:


Goal Score: 750+
Message 2 of 10
Frequent Contributor

Re: Debt Consolidation (Not loan)

If you mean - what I spent the money on - its a video game.  We have it on steam (where it sells) but we ran out of money in march (and i mean credit!).

 

I don't know an investor alive that would give me 200K and let me use like 120 of it to pay off my own debt, so that seems like a bad choice.  The game could hit in a month and do great, or it could be slow and take a year to take off, or it could never sell. In hindsight it was an awful decision but "we should try it at least once" and "it's a bucket list item" were where my head was at Smiley Sad



CK EQ: 730 / CK TU: 735 / EXP FICO: 721 / EX Vantage: 793 / Total Exposure: 112K
Message 3 of 10
Frequent Contributor

Re: Debt Consolidation (Not loan)

If you are selling equity in the company, then you may as long as they believed in the promise of the game. It may have to be a lot of equity, but software is an area where some angel may come along if you pitched it right and could show some promise in downloads and installs, the userbase is where the money is for investors in SW. 

 

If you are out of money unless its something that goes viral it's going to be tough to get traction without some advertising dollars.

 

Like I said I'm not sure of the answer here, but you do have this interest piling up every month and that's assuming there is enough revenue to make the minimums if not then it's a negative sum game where you will lose the cards anyway due to charge-offs. This company may be a method for you to stay afloat until hopefully, it starts to sell. But you are still going to be in debt regardless.

 

Not telling you anything you don't already know and I wish I had an answer, but I don't. I remember an old saying from my grandfather, you can't borrow your way out of debt. I wish you the best with coming up with something that works out in the end.

 

Started Rebuild 4/2018: EX 616| TU 604| EQ 621

Current 11/15/18:


Goal Score: 750+
Message 4 of 10
Super Contributor

Re: Debt Consolidation (Not loan)


@mccallb wrote:

Hey all,

I have recently had to really run up my credit cards in the last 14 months due ot an ill fated business venture. (Learned that lesson)  Long story short, I rang up about 100K in credit card debts. (payroll ,expenses)

 

Now I'm in a position where I'm waiting for the product to finally make some money - but under a mountain of high apr bills.

 

I got an offer from a company called Tweed Financial which dovetailed to a company called Finance Solutions.  They offered to consolidate all my debt to a singular payment, at 0% apr, and slowly pay off all the creditors over the next 42 months.  The caveats are that the accounts get closed - and the balances report (as they are paid down).  

I worry about how bad this hurts my credit (i still have close to a 700 even with 65% util)  And more importantly, how badly does it hurt my relationship with creditors?

I have some really great triple A cards and it hurts to close them, and hurts more to think i couldn't get an account with them again.  The company assures me I'd be in good standing with the creditor, but when i asked about keeping my Amex Plat and closing my BCE - he said they may actually close out the plat too, just because, which would be a huge shame.

Any advice would be most appreciated!


My advice would be to just pay things down out of the cash flow. And stop borrowing for a good long while.


FICO8 EQ 743 TU 777 EX 752 Total revolving limits 618800 (508800 reporting)
Message 5 of 10
Frequent Contributor

Re: Debt Consolidation (Not loan)

I'm at a net loss on a monthly basis with the bills due to the interest rates (around 18).

The consolidation place will be able to save me over $2000 a month which makes it a hell of a lot easier to pay down the debt, and use extra income to assist.

So while borrowing to get out of debt is of course a terrible solution, I have high income and earning potential, i just need breathing room.



CK EQ: 730 / CK TU: 735 / EXP FICO: 721 / EX Vantage: 793 / Total Exposure: 112K
Message 6 of 10
Super Contributor

Re: Debt Consolidation (Not loan)


@mccallb wrote:

I'm at a net loss on a monthly basis with the bills due to the interest rates (around 18).

The consolidation place will be able to save me over $2000 a month which makes it a hell of a lot easier to pay down the debt, and use extra income to assist.

So while borrowing to get out of debt is of course a terrible solution, I have high income and earning potential, i just need breathing room.


I'm not sure what the business model is of this company that is willing to pay off your debt for free, but I don't trust it.


FICO8 EQ 743 TU 777 EX 752 Total revolving limits 618800 (508800 reporting)
Message 7 of 10
Valued Member

Re: Debt Consolidation (Not loan)

Finance Solutions is debt settlement company. They offer something called a “credit card modification” program...this essentially is giving them a lump sum every month(a ton of what you give them goes towards “legal fees” for months) then they supposedly wait until your accounts are charged off (90 plus days delinquent)and try to negotiate with the creditors to settle for less...only they a) might not settle b) might sue you in the meantime...you end up only putting a small portion of that money you pay every month into their escrow account(handled by yet another company) (for at least 18 months) before you even begin to have enough in there to try and negotiate a settlement with a creditor(or potentially a collection company if it’s been charged off and sold) also, there’s a good chance that creditors will send you 1099’s and you will have a tax liability as well. I started getting information from this company recently and when we decided not to go through with this “plan” I was yelled at by the rep. I don’t suggest them
Message 8 of 10
Valued Contributor

Re: Debt Consolidation (Not loan)


@Elexismc wrote:
Finance Solutions is debt settlement company. They offer something called a “credit card modification” program...this essentially is giving them a lump sum every month(a ton of what you give them goes towards “legal fees” for months) then they supposedly wait until your accounts are charged off (90 plus days delinquent)and try to negotiate with the creditors to settle for less...only they a) might not settle b) might sue you in the meantime...you end up only putting a small portion of that money you pay every month into their escrow account(handled by yet another company) (for at least 18 months) before you even begin to have enough in there to try and negotiate a settlement with a creditor(or potentially a collection company if it’s been charged off and sold) also, there’s a good chance that creditors will send you 1099’s and you will have a tax liability as well. I started getting information from this company recently and when we decided not to go through with this “plan” I was yelled at by the rep. I don’t suggest them

furthermore, such programs completely trash your credit.

Ch 7 Discharge May 2015
Discover/Target/NFCU CLOC/NFCU Cash Rewards/PenFed Power Cash Rewards/PenFed Pathfinder AMEX - $60k total revolving
EQ/EX/TU: FICO 8's Oct 2018: 700/685/671, 1% utilization/AZEO, INQ's: 6/2/4
Message 9 of 10
Frequent Contributor

Re: Debt Consolidation (Not loan)

Might you be able to pick up a second job for a while? Or sell off an asset (downgrade your vehicle, get rid of a motorcycle/boat/jewelry/whatev) to reduce those balances to something more manageable? You can always replace them later when the game takes off or the balances have been paid. Even a debt consolidation loan where you close a few of the cards as part of the deal would leave you in better shape.

Going with this company is just another gamble and I don't like your odds. Why destroy your credit over a few dents if they can be repaired?
Wandered out of the garden for a bit and bought myself a house. YAY! Grabbed a couple cards while I was out there too but now I am back for at least six months, if not longer. Time to let the good cards I already have grow and get focused on paying down this mortgage.

MikkiD's rebuild page

Message 10 of 10