Debt....a four letter word

SOME companies will close your account and lower your interest rate with a payment plan(don't be late or they raise the interest). Most of the time you have to be late on payments. I have found that just before they take your to court to get a judgement they will settle for less than the original balance (before late fees and interest) although by that time your credit is wrecked and on your credit report as a charge off. Its better for your credit to try to work out a payment plan with the creditor before you get late or sent to a collections company. I wouldn't mess with most of these debt consolidation or settlement companies because of the fees but if you are stuck and can't do anything a consolidation loan would be better than defaulting AS LONG AS you can make the payments.

Yes, if you had a good credit rating... but if you are having trouble making payments, that rating probably isn't so good. There is also the extent of the total amount, and what possible collaterial one might have... Paying 8% on a consolidation may be a few more percent than one can get from a bank.... but it is a whole lot better thatn 16% or higher from some credit companies.

I just happened to hear a story on NPR with people talking about what a horror story it had turned into for them. I figured it was legit up until then.

Dave Ramsy says if you want it done right, you'd better do it yourself. Google him and get his books from the library. I listen to his radio show daily....very entertaining.

Dave Ramsey's book, Total Money Makeover, is well worth the 20 bux it costs at Barnes and Noble. I don't know how deep one has to be before this won't work but I'd bet it would have to be pretty darn bad.

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"He laughed, because they were all the same"

I am shamed to admit that we have had to use help to settle our debt. We went with a company called Credit Solutions. They charge 15% of the total debt that you have when you start the program, then negotiate with the credit card companies. We had two credit card accounts, and they settled them for 40 cents on the dollar. If you count the interest accumulation after we got behind in payments, it worked out to 35 cents on the dollar. It worked out well for us. Perhaps the best thing is that we were foreced to cut up those credit cards. It's tougher to get projects done, but we are (or at least I am) much happier for it.

Please check out Dave Ramsey's website. You can do this without paying some scamers. There is one Dave recommends if you insist on using one but I cannot remember their name. If you have cable or satellite The Dave Ramsey Show comes on at 7pm my time. He is great and using his total money makeover helped me a lot.ETA: Years ago we borrowed money and did the loan consolidation and it does not work. You will have that loan and still be making other debt.

The Dave Ramsey program works as long as you stick to it. I have been doing this program since last Sept and know personally that it works. Dont go to one of those consolidation companies and give them your money.

Im new here...but I wanted to chime in on Dave Ramsey. Dave's plan is amazing and life changing. We have been doing it for about a year and a half now and will be debt free except our house in about 2 months. by this time next year we will have 5 months of expenses in the bank. We still have fun, I still have spending money...but we are intense in our purpose and both of us are on the same page....that is key. CHeck out the Total Money Makeover or Financial Peace University.
I am leading an FPU class right now and seeing how it alters lives. Amazingly powerful stuff...

Please forgive my lack of understanding. I don't understand anything beyond you buy something by paying for it. Just what can or does one of these companies do that somehow relieves or eliminates your debt? How do they make this debt go away without you paying it or what allows you to pay only part of it?

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"Education is the ability to listen to almost anything without losing your temper or your self confidence"
Robert Frost

A debt management company or CCC only gets fees and interest reduced. They don't actually lower what you owe except overall since you won't pay so much interest over the long haul.

A so called debt relief company has you let all your debts go into collections for nonpayment and then they contact the creditor and offer them a lump sum to settle your debt. So say you owe Citibank $5,000. You haven't sent them a payment for 6 months and your account has been sent to their bad debt department. The settlement company calls them and says I can send you $3,000 today if you will cancel this debt. If Citibank accepts they consider your debt a write off and it shows up negatively on your credit as a charge off. They can actually sell what is left of that debt to a collection company that pays pennies on the dollar to buy it. Then they start calling you and the whole cycle begins again.

I am planning a trip to the library tomorrow.

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"You can only come to the morning through the shadows."~J.R.R.Tolkien

Thanks all for your responces.As I posted earlier in the morning I plan on checking out Dave Ramsey`s books.
I can`t wait to get all of this behind us.I want it over as fast as possible.That`s why I was considering the quick way out.
We have very good credit and I don`t want to damage it if I can help it.Recently(over 2 years) we had to run up a good deal of money(about 15,000 on a couple of credit cards.At the time we were making pretty good money and I was paying over and above the min payment every month.Then the carpet got jerked out from under us and our pay was reduced to half of what we were making.
So starts our climb out of this hole.With our faith in God to give us the strength we will need I know it will happen.


Sharon

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"You can only come to the morning through the shadows."~J.R.R.Tolkien

So in your scenario you still owe the money, a collection agency is after you, and your credit is ruined as it should be, yet you've paid a third party for this? I often wonder what kind of money management was taught by parents to the majority of Americans. Now I have to wonder how you present a scheme like this to people and they pay you for it. I like my system better, you buy it and you pay for it.

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"Education is the ability to listen to almost anything without losing your temper or your self confidence"
Robert Frost

If you really can't meet your unsecured debt obligations you don't need counseling, debt consolidation, or even bankruptcy. All you need to do is send them a cease communication demand in writing (tell them that letters are ok, but no phone calls), and then confound the bill collectors until the statute of limitations runs out (usually 2 to 4 years). This book tells you how.

http://www.edenpress.com/showbook.asp?index=669@2@B

I'm not recommending that you do anything. I'm just offering alternative advice to bankruptcy or perpetual debt.

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I agree with you completely! It really bugs the daylights out of me that scammers like this advertise this type of so called Debt relief everywhere and imply that they can pay off all your debts for pennies on the dollar and you will be debt free when it is mostly a lie. It disgusts me that anyone allows these ads on their sites, magazines, etc.

These companies prey on the ignorant. Most people aren't taught anything at all about how to handle money anymore.

Good for you! A good attitude and faith will go a long way towards helping you get out of debt.