Nov
28

Has anyone ever used a debt consolidation company?

By
debt consolidation company

What was your experience with them? Did your credit get cleared?

Real Estate Professionals
Categories : debt consolidation

5 Comments

1

today paid .tommorrow will cradit

2

I’ve never used one of these companies but I’ve read several articles about how they work. These companies are for-profit and make sure you know how they make their profit.

I believe a good-faith letter to your creditors explaining how you plan to pay them will save you and the creditor money. You must have a realistic plan, and above all, stick with it.

You may also feel you need help in setting up a budget and in avoiding these problems in the future. In that case, there are lots of books on budgeting, classes you can take, etc.

I have provided consulting to our local Consumer Credit Counseling. They tend to be non-profit and in our case, are a United Way agency.

Mike Honeycutt

3

Yes, Consumer Credit Counseling (CCC). There are many online sources, and they vary state-to-state. Mine was located in California. While they were immensely helpful in setting up a one-lump payment plan, which helped me maintain an accountability for paying off my credit cards, I discovered some unfortunate consequences once it was paid off.

My credit rating had taken an additional “hit” because I used a credit counseling service, akin to bankruptcy (says one lender), which lowered my score!

Several years later, my rating has improved substantially and I am no longer sub-prime category for loans, which are costlier than your typical loan. So while CCC worked for me in paying off my debt, it initially came with a sacrifice to my rating. CCCs are considered non-profit agencies, but my agreement was to send $20 with my monthly payment, so it must pay for something, if not office space and salaries.

While you do not use any of these cards as you’re paying them off, you might want to think about how you’ll handle the way you spend money in the future…swipe or pay cash out of envelopes labeled “Water bill,” “groceries,” etc. If you can negotiate with the card companies directly for a lower rate or some other option, that may work best.

So, CCC does not “clear” your credit, you clear it by paying off your debt! Don’t fall for scam artists who claim to make your debts disappear. I just doesn’t happen. You can realistically negotiate with the companies yourself. Just be honest and realistic about what payment schedule would work for you.

After all is said and done, you might want to consider not valiantly cutting up all your cards. According to financial wizard Suze Orman, that’s a bad idea. She says that, while it’s best to not use them, to keep the credit lines. I’m not sure this is always good advice, or if maybe keeping only one or two cards is a better idea.

Thinking of spending in terms of “needs,” “wants,” and “desires,” as well as putting off purchasing, has helped me have a better rein on where the money goes.

You could also take other measures to keep yourself from accessing them, provided they have no annual dues, like freezing them in ice or burying them in a shallow grave. Hey, if it works…!

If I had to use a consolidation service again, I might choose another organization…perhaps the one on this site: christianccc.org/index.php.

THis site has excellent sources to help you on this Web page: christianccc.org/modules.php?name=Educational_Department

However you decide to attack the debt, try to stay encouraged and don’t despise the process. Like the old adage…this, too, will pass.

4

No…I have heard that those places are a scam.

5

There’s some information on how debt consolidation can affect your credit score on this website.

Hope this helps. Good luck!

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