Has anyone used a debt consolidation service?

Question

Just looking for a recommendation.

Answer 1

When you start to look at the different companies to handle your situation please do your research. Working in this industry has taught me so many things and I have wised up to the fact nothing is as appears. Don't ever trust the BBB, I worked for a company a number of years ago , in perfect standing with the BBB but under so many lawsuits and yet none were reflect on the BBB. Check your company out on ripoffreport.com Its a great site and you will get a non bias perspective.
Fully Know your options
When I go over the different programs with my clients I make sure that they understand the laws in their state( laws concerning debt vary by state) and I also make sure they understand the worse case scenario.
Don't ever believe that their are NON for profit agency's.
Big fib. Their are not and real non for profit agency's. Consumer Counseling services is funded by your creditors know that going it.
4. Understand the programs. I am not bashing ccs they have helped a lot of people. Each program negations or ccs is suited for a particular clients. There are pros and cons and your situation makes you a better candidate for one or the other. Their are a lot of unscrupulous companies. Here are some guide lines to follow when choosing a negations company
1.The chosen company should not ever touch your money. They need to use a 3rd party and keep the payment bank structure for transfer, always keeping your money no matter what FDIC.
2. Make sure their not on ripoffreport.com or currency being sued
3. They should never charge over 15%
4. everything should be based on 44% and thing less and you may end up having to pay more money in the end.
5 A reputable company will not guarantee the out come. Experience tells us one thing but the FTC does not allow our companies to make promises.
6. Read your cancellation policy
7. Get everything in writing.
8. Make sure they are accredited and licensed.
Last of all even thought their are some good companies in California and Florida these states are know for the fly by night companies because regulation is so lose there
Its great your getting your debt life on track. Just do your home work be committed and know anything you do short of pay your creditors 150% will affect your credit score one way or the other. Credit is not permanent and the money you save could very well be worth it.
Kourtnie Donihoo
Debt Analyst
Enhanced Debt Assistance

Answer 2

I've used a debt conolidation service in the past. The best thing about a legit service is they'll help you create a budget; work with your creditors to 1) pay what you can afford 2) possibly remove late charges and 3) maybe reduce the interest rate; and the service won't charge you too much in fees to do all this.

Of course, you've got to stay within the budget they help you create. Sometimes they'll offer money management courses to hejlp you do this. When the service negotiates with your creditors they'll close the accounts so you can't use them anymore and you'll have to destroy all of your credit cards. Some people keep one credit card for emergency--don't tell the consolidators! But, I think this never works out well and you're better off just giving them all up.

It will take a long time to pay off your creditors and re-establish good credit. If you've already got bad credit it will take seven years for that info to disappear anyway.

In reality, you can try to negotiate with your creditors yourself but a debt consolidation service has the experience and offers the added benefit of teaching you how to handle your finances.

Good luck!!

Answer 3

Myth: Debt consolidation saves interest, and you have one smaller payment. Truth: Debt consolidation is dangerous because you treat only the symptom. Debt consolidation is nothing more than a "con" because you think you've done something about the debt problem. The debt is still there, as are the habits that caused it - you just moved it! You can't borrow your way out of debt. You can't get out of a hole by digging out the bottom. True debt help is not quick or easy. Larry Burkett, noted financial author, says debt is not the problem; it is the symptom. I feel debt is the symptom of overspending and undersaving. Our certified counselors will not recommend debt consolidation for a client. Why? Because debt consolidation doesn't work. Debt Consolidation Statistics A friend of mine works for a debt consolidation firm whose internal statistics estimate that 78% of the time, after someone consolidates his credit card debt, the debt grows back. Why? He still doesn't have a game plan to either pay cash or not buy at all. He also hasn't saved for "unexpected events" which will also become debt. Debt consolidation seems appealing because there is a lower interest rate on some of the debt and a lower payment. However, in almost every case we review, we find that the lower payment exists not because the rate is actually lower but because the term is extended. If you stay in debt longer, you get a lower payment, BUT if you stay in debt longer, you pay the lender more, which is why they are in the debt consolidation business. Debt Consolidation Example For example, let's say you have $30,000 in unsecured debt, including a 2-year loan for $10,000 at 12%, and a 4-year loan for $20,000 at 10%. Your monthly payment on the $10,000 loan is $517 and $583 on the $20,000 loan, for a total payment of $1,100 per month. The debt consolidation company tells you they have been able to lower your payment to $640 per month and your interest rate to 9% by negotiating with your creditors and rolling the loans together into one. Sounds great, doesn't it? Who wouldn't want to pay $460 less per month in payments? But they don't tell you that it will now take you 6 years to pay off the loan. This may not sound that bad to you at first unless you realize how much more you will actually pay in additional payments. You will now pay $46,080 to pay off the new loan vs. $40,392 for the original loans, even with the lower interest rate of 9%. This means you paid $5,688 more for the "lower payment". Not such a good deal after all. This example shows you why they are in the business - because they make money off of you.

Answer 4

I called several once when I needed help. I did find outhow they work in general. What happens is you continue paying your minimum about which they lower for you. Then the creditor (credit card, loan, whatever) stop receiving payments.

When the account is about to default (that is, go into collections) the debt consolidator (DC) is contacted (they list themsleves as the contact of your account) the DC negotiates a payoff amount and pays off your debt at a reduced amount.

You then continue paying the DC at the reduced amount and there is a reduced pay off amount as wel.l.

For example: If you owe $5K and are paying $75 per month. The DC has you pay $55 per month. Once you get down to $3500, the DC pays off your $3500 for $1500. You continue to pay until you have spent $3k on principle , not counting interest.

The DC makes a few grand, you "save" a few grand, debt payed off earlier than you think.

BE CAREFULL ! Sometimes it could affect your credit. Sometimes you end up paying less for longer and it only seems like you're saving money.

Answer 5

I used a nfp Christian Credit Counselor service. They made me sign a contract to fore go any additional credit applications. They renegotiated my interest rates. They keep the creditors from dunning me for payments. I am on a reasonable monthly automatic draw to the service, which pays my bills to the creditors. In five years I will pay off all my debts with no consolidation loans. I had to make a budget. The drawback is that payments less than the required minimum may still be considered a late payment. Late charges need to be negotiated away. The credit people react in different ways to a "managed" credit account. It it great for me. My service requires a tax deductable donation to keep their program going.

Answer 6

Stepup is right. You may want to see if you should consolidate.

If you do decide to consolidate, make sure that you research consolidation companies to determine what the best terms are. Make sure they are in good standing with the Better Business Bureau.

Answer 7

DO NOT DO THIS!! I work for a mortgage company and I swear to you it shows up on your credit report as a bankruptcy. Work out payment plans with the credit card companies yourself and it will save you a lot more in the end. I swear.

Answer 8

yes but it's better to fix the cause.
It did help me short term, but you must change yourself to help long term.