Can somebody give me any advice (from experience) on debt relief programs?
Thanks everyone. We’re current on payments, and haven’t used any of the cards for two years. We just can’t make more than the minimum payment, and we’ll never be payed off if that’s all we can swing. We don’t have that much debt compared to a lot of folks we know, but just looking at all options. I’m thinking we’re going to check out a non-profit organization, like suggested by a few of you. Thanks!
STAY AWAY from any "debt consolidation" company that promises to cut your debt 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. Example: http://www.ripoffreport.com/reports/0/443/RipOff0443192.htm
None of these “debt consolidation” firms have the power to force your creditors to accept settlements. Your creditors have the right to refuse these terms and take you to court.
A better 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. They can negotiate lower payments and interest rates. They do not negotiate settlements.
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 impossible 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 probably be denied while you’re enrolled in the CCCS debt management program…. Otherwise, it can be a very good way to deal with your debt.
I don’t have any experience, but be careful who you trust. Have you ever heard of Dave Ramsey? He is really popular right now because he tells you like it is. Google him, he’s got a daily radio show (national) and has a website as well.
Good luck to you!
They are ripoffs, I worked collections at large credit union and all they would do would send letter asking if we would settle. We in turn threw it in the trash can. We contacted members telling them if they were having financial problems and couldn’t make agreed payments to go to consumer credit counseling a non profit agency. When consumer credit counselor worked with member and set up lower payments with all creditors, everything was good to go. Your yellow pages has their number. These debt relief companies charge a fee, promise what they can’t do and in some cases while they are fooling around the credit seeks judgment.