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Debt questions/consolidation/settlement
July 3, 2007
10:07 am
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lettingo
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has anyone ever used a debt consolidation or debt settlement company. My ex-h who raked up a lot of credit card debt is pretty much never going to pay a dime while he sits in jail. To recap, he went off on prescription drugs and was using my cards to buy stuff and then pawn it. At my divorice hearing, I told the judge I didn't expect anything from him so I don't know if that is going to screw me now. I am thinking of calling my divorce attorney to see if he can call my worst credit card debt, and see if I can settle on paying half and calling it good. I have some money in stock that I would pull out for it just to get rid of this monkey on my back. I just can't keep up and it's making me crazy. I was working a second job to help but I got laid off from it and I just can't do a second job again. It is just too much. Anyway, wanted anyone's experiences with this before I paid my attorney for the same advice.

July 3, 2007
10:11 am
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CAMER
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I tt to a debt consolidation company, and they too told me they could pay MY debts off for about 1/2 the total amount due...BUT, somehow my credit rating would be screwed up, for the first few years till the entire minimized payments I made were paid off.

Cuz i too wondered how a debt/consolidation company could cut my bills in 1/2, well, somehow they can, but i have to deal with the bad credit for a few years.....I myself, just chose to pay, and switch over to low/no interest credit cards.

Hope this helped.

July 3, 2007
10:22 am
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lettingo
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Thanks for the info. I think I would deal with the bad credit. At least it's not a bankrupcy. I just want to do with this with one card. Basically have them cut it in half and then pay the half out of pocket. Again, thanks!!

July 3, 2007
10:39 am
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risingfromtheashes
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Lettinggo.

Here is my experience.

I had the option - go with the consolidation company or bankrupt.

I had a consult with the consult company (HIGHLY recommended is consumer credit collections, I think...it's a national company and they are well recognized and don't charge, but a small fee).

They could reduce my debt by about $50 a month.

It wasn't enough. The only thing they were able to do was get my payments reduced, but it took LONGER to pay...meaning I was paying less than the minimums and wasn't paying high interest, but because I was not paying my minimums, and it would take longer, it would hurt my credit LONGER.

Sometimes they can negotiate for paying off half...other times, they can't...depends on the credit card company. When you call, they AUTOMATICALLY know which companies will reduce and which ones won't.

So, I consulted a bankruptcy attorney.

And for $1500, I could declare and get all debt wiped out. Mind you, all my debt was credit card related. I renegotiated to keep my car...and agreed to keep paying. You can do same with a house I think.

Anyway, it stays on your record for seven years, BUT - for major stuff, like car loans and mortgages, it stops hurting after two years. And most major credit cards like providian and capital one offer cards after six months to help you rebuild your credit.

I found that my credit score was better after three years - having rebuilt my credit after the two year point. I did need a cosigner for my first car loan after the bankruptcy, but after that, had good enough credit to buy two more brand new cars at a decent interest rate. I also could buy a home after two years.

IF you go with credit consolidation, it will have strikes on your credit for as long as it takes to get it all paid off, THEN two years after that. I couldn't take that long. If you have money in savings to pay them off once they renegotiate, then you may have better luck. But if it takes you five years to pay them down, it will take you a full SEVEN years to get your credit back to decent.

Hope this helps.

Also know that new bankruptcy laws require you to go thru credit counseling first....and it costs more to file than before. It's more of a challenge to file than before.

July 3, 2007
10:54 am
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lettingo
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Rising, thanks so much for the information! I am trying everything not to file bankrupcy for credit card debt but like I said, I've been struggeling. I will continue to weight my options. Seven years is a long time...ouuch! These are the days when I really resent my ex!!!!

July 3, 2007
10:58 am
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risingfromtheashes
st regis falls, ny
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lettinggo...

that seven years was an example.

once you go thru consumer credit counseling company...they will tell you how long you have to pay before your debt is clear...add two years to THAT number for your specific situation.

And that's only if you keep your credit in good standing for that two years.

Bankruptcy is a bigger stigma than it really is...other than feeling guilty for it...and some shame (yes, I have it)...it really is the solution in many cases.

July 3, 2007
11:08 am
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MissThaing
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I was in debt a few years ago, and considered bankruptcy too. Everything just seemed so overwhelming, and bankruptcy looked like a good option. However, my sister-in-law, who is an attorney, advised me to avoid bankruptcy at all costs, because the long term effects of it are so negative. It doesn't just affect your credit, it affects job offers also. I just contacted all the places I owed money to, set up a payment plan (some of them were not helpful, some were very nice) and my debt is now mostly under control and my credit rating is up since I am making regular payments. What a relief! Good luck to you!

July 3, 2007
11:20 am
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risingfromtheashes
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empoloyers cannot, by law, run a credit check without your approval.

so, when you apply, you have the ability to tell them that you had a messy divorce and had to file bankruptcy...unless you are applying for a huge corporate thing...most employers understand.

July 3, 2007
11:55 am
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lettingo
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I just talked to the credit card company where I owe $12,000 and said I'd pay $6,000. They said they can only settle for medical hardship!!!! I said would they rather I file bankrupcy? They said if that's the route you need to take.

July 3, 2007
12:41 pm
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nancee
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I went through Consumer Credit Counseling to manage my debt. They negotiated lower interest with most of my creditors. My payment was not much less than I was already paying but with the reduced interest, they estimated I would be debt free in 22 months.

That was a year ago in February. I was no better off. Two of my credit cards did not accept the plan because of miscommunication and I had to do the leg work to get them the documentation they needed and then they would refuse the proposal for another reason. I found I had to stay on top of my debt counselor to keep this taken care of. At the end of a year I was no better off.

I recently filed a title 13 bankruptcy. It is actually a reorganization, I consulted and retained an attorney who included his fee in with my debt. It was brought before a trustee who determined how much disposable income I had to pay toward my debts. I send the trustee a money order once a month and he disburses funds to my creditors. At the end of the three years, any remaining debt will be discharged.

I felt like I was in a position where it didn't matter what it did to my credit as I was making a mess of it on my own. Under the program I am not to assume any new debt. The only downside I have found is that my car was stolen 2 weeks ago and I have to get approval from the trustee to buy another vehicle to make sure it is within the price range I can afford. I am still waiting on the approval two weeks later...

July 3, 2007
12:45 pm
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lettingo
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nancee, thanks for the information on the debt consolidation. Not very encouraging. I am set up to speak with a financial counselor set-up through my work so it will be free. The financial stress is just not worth it at this point!

July 8, 2007
1:58 am
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northernlights
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My in-laws used a debot consolidation company to get out of their financial crisis. It saved them from claiming bankruptcy and helped them emmensly!! It really did change their lives. They are now debt free, other than their home. It was the best decision they ever made. I think it depends on how far in to debt you are. For the person who it only helped by $50, that is probably b/c they weren't in bad enough shape. I know I called once and they told me I wasn't far enough in debt for their services to be worthwile for me. I would call and see what they say.

July 8, 2007
7:45 pm
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armyleo
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I haven't read what others responded, but did want to let you know what my experience was.

We we to CCC, paid of our debts in 4 years, what a relief, when all I had to send was 1 check, and they distributed, to all the companies we owed. They basically, make more payments to one company, and pay that off, then when that's paid, they add that amounts to the next company and so one, until all your bills are paid.

For someone who is disciplined, it's an easy method to follow...I one time found a company on-line, who laid payments out for five years, which cards to pay first and what amounts to pay each company, month by month.

On our credit report, ~ 2 companies closed our accounts and stated we paid via CCC.

It couldn't have messed up our credit any more, because now we were making payments on time, instead of having 30, 60 and 90 day delinquencies.

Also, some companies stop charging us high intrest rates, others kept the same intrest rate.

We did fine for 5 years, I learned not to use CCs. At the begining, that was the hardest thing for me. Buying only what I had the cash for. Then after the 4 years were up slowly we started building up debt. At first it was a CC for emergencies, then to buy things on-line which were cheapter, but we told ourself's we would pay everything at the end of the month. That worked for a while.

Only problem is we are in debt again, and in serious trouble, with cc's and 2nd on the home.

Good luck with your situation.

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