Article Score0

I am in debt – it is not a huge amount, but I feel like it is getting out of control and I need to do something about it to work it out. I have been thinking about going to a debt consolidation company to help get me back on track. Has anyone ever used a company like this? Was your experience good or bad?

Thanks for your help!

4 Thoughts on Consolidation Companies – Good or Bad Idea?
  1. Reply
    October 31, 2011 at 5:41 pm

    You can do it yourself. Simply set up auto-pay with your creditors, and they’ll take out the minimum payments automatically, no red tape on your part, and you won’t pay a consolidation fee.

  2. Reply
    October 31, 2011 at 6:30 pm

    some of the companies are absolutely a scam
    I do know there are honest people who will assist you with your problem, however, if you personally talk to each of them yourself, you can probably do a better job of resolving the debt without having to pay anyone to do it for you

  3. Reply
    October 31, 2011 at 7:21 pm

    Stay away from any “debt consolidation” company that promises to cut your debt and payments in half through debt settlement….This is a risky tactic of deliberately ceasing all payments to creditors and forcing your accounts into default to attempt settlements. You pay a monthly fee to a debt consolidator….this entire fee goes towards building a settlement account and to the consolidator’s fees to “settle” your accounts in the future. Your credit card companies will deliberately not be paid so that all the accounts will default/charge-off so that they can attempt settlements at around 50%. If you are current on your accounts, this process will ruin your credit rating for sure. Debt settlement is like a roll off the dice with your finances…You can never predict how your creditors will respond to the deliberate defaulting of your accounts…they might settle at 50%…or they might serve you a summons, take you to court…and if they win, you could be looking at wage garnishment.

    Many people who sign up with “debt consolidation” firms incorrectly assume that they have the power to force your creditors to accept settlements…they don’t. Your creditors have the right to refuse settlements and take you to court.
    One option is entering a Debt Management Plan (DMP) with a non-profit credit counselor like CCCS (Consumer Credit Counseling Services). Contact your local Red Cross for a referral to the local Consumer Credit Counseling Services (CCCS). They can negotiate reduced interest and payments. They will require you to stop using all credit and to cut up your cards. Your credit report will be updated to “enrolled in debt management.” This does not damage your credit, but it may make it difficult to obtain new credit while you are enrolled in their program….so don’t use this service if you anticipate applying for a new apartment, car loan or mortgage anytime soon, as you would might be denied while you’re enrolled in the CCCS debt management program…

    If your debt is overwhelming relative to your income/assets and the reduced payments negotiated by CCCS simply will not work, then you should think about filing for Chapter 7 bankruptcy

  4. Reply
    October 31, 2011 at 7:50 pm

    Yes, many of the debt consolidation companies are a scam. If you are referring to credit card debt I recommend that you check to see if the credit card company has a debt management program. I work for a credit card company and we offer a debt management program for free and it allows you to work with a non profit organization to consolidate multiple credit cards (even from different banks and companies) for a lower interest rate. Typically, this is allows the customer to lower multiple credit card payments into 1 manageable payment at a lower APR. Often enough debt management companies will try to work with you to lower your payment enough to be able to pay off your debt completely within 5 years. I recommend checking with your credit card companies first and if they are unable to assist you, look for a not for profit debt management agency to help you. Stay away from debt settlement companies and debt settlement attorneys; they are bad news because they tend to charge for services you can get for free. Don’t get me started on debt settlement attorneys! CatDad said it perfectly! 🙂 Good luck to you!

    Leave a reply

    Register New Account
    Reset Password