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I owe $ 17,000 on two cards. My ex wife ran these charges up and now I cannot afford to pay them off. I can barely make the min payment every month and will likely take my entire life to pay them off. Has anyone every used those credit card payoff programs that settle for pennies on the dollar. Anyone, please give me some advise. I am 42 and realize that this could hurt my credit for years to come but I just cannot survive with this debt.

3 Thoughts on Help with my Credit card debt?
  1. Reply
    January 29, 2013 at 4:37 pm

    Hi. You could try talking to a Debt Management Agency they could help you in some sort of way and try clearing the mess out for you. Just use the Yellow Page or search online for the best Debt managing agency. Hope that helps.

  2. Reply
    January 29, 2013 at 5:17 pm

    Debt settlement companies charge hundreds of dollars as an initial “admin fee” to set up your account, plus a monthly service fee. The fees vary depending on the company and the amount of your debts.

    Such companies take your money every month, but don’t make monthly payments to your creditors! Instead, they put it in a trust account, negotiate your debts with your creditors, then make a lump-sum payment when there’s enough in your account to pay a creditor in full.

    That can take *years* depending on the amount of debt you have with each creditor. Meanwhile, you can be sued by your creditors and your wages can be garnished! (Or just don’t make payments to your creditors. You’ll end up in the same spot without paying someone to help you get there!)

    Settlement companies don’t ask your creditors to stop all interest, late fees and overlimit fees from accruing. That means while the negotiations are ongoing, your bills will continue to grow! So if you’re sued and a judgement is brought against you, you’ll owe more money than before!

    And shoddy companies, which there are alot of, don’t tell you *any* of this up front. I call it “getting permission by ommission” because they simply don’t tell you how their program works *before* you sign an agreement with them. Or after, for that matter. But if you ask the right questions, eventually you’ll figure it out. (Or when the crap hits the fan. Whichever comes first.)

    Let me give you an example of how debt settlement works.

    Let’s say you have $ 20,000 in unsecured credit card debt. You owe $ 10,000 to one credit card company, $ 6,000 to another and $ 4,000 to a third. You agree to a 5 year plan where you pay $ 250 a month to the settlement company. (After all, $ 250 a month for 60 months is only $ 15,000, so you’re saving $ 5,000 and you’ll be debt-free in 5 years, right?)

    The admin fee will cost you $ 750. Your first 3 monthly payments go towards that and nothing gets put into your trust account until your 4th month.

    The settlement company keeps $ 50 of your $ 250 payment each month for the service fee. That means $ 200 a month is being added to your trust account.

    Most debt settlement companies claim to be able to negotiate your debt for about 50% of what you owe. So let’s use the lowest credit card debt as an example.

    If you owe $ 4,000 and your creditor agrees to accept $ 2,000 as payment in full, it will take 10 months at $ 200 per month to have enough in your trust account to pay off just that one credit card.

    But remember, your first 3 payments to the settlement company only paid the admin fee. That means your first credit card settlement is 14 months *after* you started sending them money.

    So what’s the problem? It’s simple. Your creditor won’t agree to accept half of your actual debt unless, or until, it can be paid in full. Otherwise, you’re expected to make your normal monthly payments.

    Since you don’t have $ 2,000 in your trust account, and you won’t have it until more than a year after you stopped paying your creditor directly, they’ll probably take you to court and request that your wages be garnished long before you have that $ 2,000 built up.

    And what about your other creditors? Well, they’ll be waiting even longer to get their money from the settlement company. The $ 6,000 debt will take 15 *more* months to pay off, assuming your creditor waits that long and agrees to 50%. And that $ 10,000 bill? You do the math.

    On the other hand, if you signed up for a 3 year plan with the settlement company, your debts would be paid off sooner. But, the question is, will your creditors wait that long? Probably not.

    The facts are, you can negotiate with your creditors yourself. Most will agree to take a smaller monthly payment from you and stop all interest and fees from accruing. And, of course, you’ll save thousands of dollars in fees to a settlement company.

    Before signing up for any service, please be sure you check out the company thoroughly. And don’t let the words “non-profit” fool you either. Alot of debt settlement companies claim to be non-profit.

    Going back to the example above, if you pay them $ 15,000 over a 5 year time frame and they settle your debts at half of what you owed, they’ll make $ 5,000 from you. I’d call that a profit, especially since they might not have actually helped you in any way.

  3. Reply
    January 29, 2013 at 5:56 pm

    There are a couple options here as I see it. You can work with a settlement company but it appears many of the issues with that have already been pointed out. Working out a payment plan with a collection company will wreck you credit as every months payment will refresh this on your report and you really don’t want that being that things on your credit are waited by the proximity to the current date. Debt settlement can be okay if you first work out with the collecting agency that the debt will be completely removed from your credit report when satisfied, not just marked as “paid”. I work for a credit repair and restoration company called National Credit Care. If you would like to hear more information about keeping your credit clean or removing the items on there, let me know and I can explain in more detail how this process works. We average 24 pts returned to your score and 6 deletions oderogatoryry items per month.

    P.s. sorry if this sounds like a sales pitch, I really did just stumble upon your question. Feel free to check out the website first.

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