Hello and welcome.
I think for us to help point you in the right direction, we would need bit more details about the accounts you are trying to pay off as well as some of the terms of NDR (some of us might be familiar with them).
(Ex. Loan 1: $5,000 at APR% for XX months and what is the minimum payment.
-Credit Card 1: Balance $2000, Credit limit $2000, APR%, minimum payments)
Right now we know you are to dig yourself out of the hole, but without some details, we wouldn't know how to advise.
@hello wrote:Hi, I got myself into a pickle. Obviously I got myself into a bad financial mess (I moved and got in over my head in credit card debt and some high-interest loans). I'm now paying a lot less in rent, but due to the high-interest loans, I was really struggling to pay bills. I made a probably dumb decision to use National Debt Relief to try to get out of debt (and free up more money to pay down the other debt).
It's now been a little over 6 months. I'm still paying off the loans (and should be done with those in July or August if not sooner). I'm paying $400+ to NDR monthly, and they've gotten some settlements, but of course I am paying them 25% on top of that, of course, potential taxes.
I just ran my credit report and all of the credit cards are now showing as charged off. I am aware that this may or may not mean they stop reporting as late payments. But in your opinion, once I get the loans paid off - which will free up about $1300-1400 a month (!!!) - should I cancel the NDR program and try contacting each creditor to settle it myself?
My end goal is to buy a house. My credit score is in the low 500s right now. I may be able to work with a mortgage program like NACA or USDA that's a little more lenient, but I know I'll have to have at least a year of no late payments.
Any advice is welcome! Thanks!
NDR is charging you money for something you could be doing yourself for free. In addition, they will be of no help to you if one or more of your lenders decides to sue you for the debt.
Being the accounts are now charged off they won't report any further late payments since the charged off status means they've now also closed the account, deemed the debt to be a loss on their ledgers, and unlikely to be collected. It doesn't mean the debt goes away, or is forgiven.
Until the accounts are paid to zero they can continue to report the charged off status every month along with the remaining balance. Once they're paid to zero (either in full, or settled for less) they'll update the reporting to reflect a zero balance and the monthly CO reporting will stop.
I'd recommend dropping NDR and continue to work with your lenders (including asking them to reduce interest rates) to reach settlement agreements/payment plans and continue paying what you can towards the debts which should help to prevent them placing the accounts will collection agencies, or pursuing legal action. As you get debts paid off (loans, etc) use the money you were paying towards those debts to pay down the remaining debts until they're all gone.
You have a lot going on, and with all those accounts in a Charge-Off status, I’m not sure NDR is offering anything you can’t handle yourself, which would also save you some fees. However, you should carefully review the fine print of your agreement to see if there’s any cancellation fee.
Now, about your credit report situation—be honest with yourself. In your first post, you mentioned, “Obviously I got myself into a bad financial mess (I moved and got in over my head with credit card debt and high-interest loans),” but there are 20 accounts listed in bad standing. It’s unlikely that they all stem from just one move. It’s possible that you were already stretched thin before the move, and the added expenses pushed you over the edge.
Focusing on high-interest loans is probably the best strategy to stop the financial hemorrhaging—also known as the "Debt Avalanche." Paying these off first should improve your financial situation faster than the "Debt Snowball" method would.
As you start paying off your accounts and creditors begin reaching out via mail, you should try to negotiate a "Pay for Delete" agreement. This means that once you pay or settle an account, the creditor agrees to delete it from your credit profile.
I understand the desire to buy a house, but I think it would be better to shift that to a long-term goal. For now, focus on your short-term goal of getting financially fit and smart. Good luck, and hang in there—you’ve got this!