Hello All,
I really need some solid advice.
I am currently dealing with over $12,000 in credit debt and medical bills. I am drowning in debt and am having a hard time paying minimums on cards.
I am currently paying out over 700.00 a month in minimums with my debt. I have reached out to a consolidation company that can save me over 400.00 a month, however they negotiate the debt and pay it from moneys that have been accumulated from payments into this company.
does anyone have any suggestions on consolidation or credit counseling services that might help me get back on track?
thank you for any advice
I would highly advise NOT to use any of those debt consolidation companies. Their strategy is to let you default on everything and then negotiate payment plans for you. You pay them, they pay your creditors. The kicker is that out of the payments you give them, maybe 10% or something actually goes towards your debts. The rest is profit for them. I honestly feel you'd be worse off employing such companies.
You're better off contacting all of your creditors and letting them know of your struggles and seeing if you can get on a reduced interest/lower payment plan until your debt with them is fully paid off.
@ALLGOOD351 wrote:Hello All,
I really need some solid advice.
I am currently dealing with over $12,000 in credit debt and medical bills. I am drowning in debt and am having a hard time paying minimums on cards.
I am currently paying out over 700.00 a month in minimums with my debt. I have reached out to a consolidation company that can save me over 400.00 a month, however they negotiate the debt and pay it from moneys that have been accumulated from payments into this company.does anyone have any suggestions on consolidation or credit counseling services that might help me get back on track?
thank you for any advice
I'd always thought Debt Consolidation Companies were the good guys, until I heard one "Financial Peace" guy saying using them is like "unofficially" going through a Chapter 13 Bankruptcy. Then I was like...
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@Ceewin wrote:
@ALLGOOD351 wrote:Hello All,
I really need some solid advice.
I am currently dealing with over $12,000 in credit debt and medical bills. I am drowning in debt and am having a hard time paying minimums on cards.
I am currently paying out over 700.00 a month in minimums with my debt. I have reached out to a consolidation company that can save me over 400.00 a month, however they negotiate the debt and pay it from moneys that have been accumulated from payments into this company.does anyone have any suggestions on consolidation or credit counseling services that might help me get back on track?
thank you for any adviceI'd always thought Debt Consolidation Companies were the good guys, until I heard one "Financial Peace" guy saying using them is like "unofficially" going through a Chapter 13 Bankruptcy. Then I was like...
This is 100% accurate based on my research. I had a friend go through it and you're essentially defaulting on all your CC debt in order for them to negotiate a settlement, while taking part of the "savings" as payment. Meanwhile, your credit is shot, phone is lighting up (including your relatives) from debt collectors, and you're risking litigation. You're taking the bad marks on your credit for 7 years and it's essentially a "soft BK". I'd say you save the money on a BK attorney, but when the likes of AMEX and Discover sue you, you're looking at an attorney anyway. The worst thing you can do avoiding a BK is let these companies get judgments against you. Be prepared to have to pay a lump sum if you get sued.
When I went through my financial hardship and was forced to pay the rent / eat over paying the cards it was a similar situation. I ended up trying to get sympathy, then eventually negotiating on my own, I was sued, served papers, etc. For good or bad, the creditors weren't willing to work with me until I was seriously behind and they realized they weren't getting paid. Once my cards were getting COed and going to CAs then they were willing to work on settlements, payment plans, etc. Some I had to pay to avoid court (looking at you AMEX and Discover), some I paid in full over time, others I took settlements on COs. Whenever you pay less than the balance you get the IRS filing and unless you are insolvent you will need to pay taxes on it. I refused to BK and that's what I got.
In the end, you can do everything the debt consolidation companies do on your own and if you're ending up with COs that you settle anyway, you might as well not pay out a big portion of that "savings" as payment to a debt company. You can work it all out on your own.
@ALLGOOD351 Hi! Although it may seem tempting to have a DMC assist you and you may even believe you'll gain some relief from all that comes with going into debt. BUT, please, may I implore you to take some time and research this site and all the incredible forums, posts and knowledge our credit gurus have posted here before you decide anything? You can take control over your OWN finances and in the process not only learn from your mistakes, but the money you will save by handling your own business you can then plump back into your past debt. I promise you this, you will feel so relieved to get it all taken care of but you will also be educating yourself so that the olds financial mistakes stay in the past! Of course I can only speak for myself but the knowledge I learned from this forum has been instrumental in my credit rebuild and I will be forever grateful for all the resources, help and support. You got this.
Starting Score: 461
@ALLGOOD351 wrote:Hello All,
I really need some solid advice.
I am currently dealing with over $12,000 in credit debt and medical bills. I am drowning in debt and am having a hard time paying minimums on cards.
I am currently paying out over 700.00 a month in minimums with my debt. I have reached out to a consolidation company that can save me over 400.00 a month, however they negotiate the debt and pay it from moneys that have been accumulated from payments into this company.does anyone have any suggestions on consolidation or credit counseling services that might help me get back on track?
thank you for any advice
I am going to add a perspective that has not been mentioned yet. None of your creditors is legally required to work with a DMC. There was a time when this wasn't such a fraud riddled industry that they would work with them but after they discovered the consumer was paying a large portion of money into the DMC "fund" and they got pennies on the dollar while the DMC took a hefty fee they stopped. Basically any arrangement you make with the DMC the creditors are not a party to and not bound by. They are free to deny any settlement offer from the DMC and often the consumer doesn't find out until they are served with court papers in a suit. By that time the DMC has ghosted the consumer and abandoned them.
After all the turmoil of the past 2+ years the creditors have much more accessible hardship programs. Start reaching out to them about setting up a plan. Keep in mind that once you do they will freeze the accounts which will prevent continued use of the cards. Also, as difficult as your situation seems most bankruptcy attorneys will do a first consult at no charge. It might be a good idea to consult a couple to determine if this is a better option given your specific circumstances.
