Have you ever used credit counseling or a debt management plan?

Question

I'm thinking about using a credit counseling agency or debt repayment plan but I've heard a lot of conflicting information about them in my research. Do you have any personal experience with it? Would you recommend it? Thanks.

Answer 1

I have personally used credit counseling services. When I was young and dumb (not saying you are, but I definitely was) I ran up a lot of credit I couldn't pay off. Interest rates were killing me and late fees were adding to the balance every month. So I contacted a credit counseling service and frankly, they saved me from a horrible downward spiral.

Credit counselors are basically a go-between organization. They negotiate the interest rates down to a workable level and get late fees stopped. All in agreement that you will pay the current balance off over a 3 year period.

Positive
Interest and late fees stop racking up
Single fixed payment that is guaranteed to reach the credit company on time every month
One payment that is affordable - as opposed to all the small ones that come in at various times during the month and you can't ever seem to pay on time (thus incurring another late fee)

Negative
You will have to cut up your credit cards. The accounts are canceled
The credit company might place your account in "collections" status during the payoff process. But once the account balance is zero they will list it as "canceled," which could mean anything to a future lender (you canceled it yourself, for instance, which isn't a bad thing)

If you're over your head in debt and the late fees are adding up a credit counseling service is a good way to go.

A lot of people say debt consolidation loans are good too. However to qualify for one you usually have to be at least $10,000 in debt.

If you want to know more about credit counseling, or need to contact an agency, you can visit my site here:

http://www.1-800badcredit.com/credit-card-debt-counseling.html

I started this site because I've been there myself. And there's a lot of bad information out there.

Good luck to you! It'll all come right in the end if you can stop the bleeding!

Answer 2

Save your money and do it yourself. If you are current on your debts now, you won't be once they start handling your payments. Your credit report will take the same hit as a bankruptcy.

Set up a strict budget for yourself. Eliminate the extras -- eating out, new clothes, cell phone, etc. Take every penny you can squeeze out of that budget and put it on the highest interest rate debt, while making minimum payments on the rest. Once the highest interest rate debt is paid off, move to the next till they are all paid in full.

If you make a concerted effort, you can clear up all your debt with 2 or 3 years.

Answer 3

Debt administration agencies will harm your credit! they're going to checklist which you're working with a business enterprise to pay your costs and that they have got you ever close all your open credit money owed with a view to get you a decrease pastime fee it particularly is how they are in a position to get you to pay a decrease month-to-month charge. Sounds good.. yet its not. Why not? with the aid of fact, once you close up your money owed you chop back your charge history. Your charge history makes up 35% of your credit.. Your credit is critical for each thing. you're able to easily could desire to get on the cheap and artwork fairly not easy at paying down one merchandise at a time.

Answer 4

I have never used a credit counseling agency or debt repayment plan but I can tell you all about them. I have worked in retail automobile sales for over twenty years and we have worked with customers who have used these services.

Overall the concept is good, negotiate better terms so a merchant or bank is more likely to get some of their money back as opposed to losing it all. The problem is now these programs are being used to generate profits for third party organizations. Some of the programs are actually run buy the lending institutions themselves. The whole process has turned into one big scam. Not to mention the fact that after you complete one of these so called programs most lenders will not touch you with a ten foot pole.

Sounds strange doesn't it? If you repaid your debt why wouldn't they want to extend you more credit? The reason is that you allowed someone else to tell you how much you should repay your creditors and you did not try and work out a settlement plan with your creditors directly. Ultimately someone else got paid and left your creditors on the hook for more than they would have been if you had worked directly with them. Creditors look poorly on such behavior. What else could you have done? You had no money and everyone wanted to get paid.

If you are faced with a tough situation take a few moments and learn about the credit collection laws. Most people never take time to find out what they can do to stop the calls and that is what drives most people to bad decisions like joining credit counseling. After you learn about your rights contact your creditors by mail (return receipt requested) and let them know what the situation is. Explain to them how you are planning on paying them back. Ask them for their help. Most of all don't threaten them with bankruptcy just tell them you want to repay the debt as fast as possible. Ask them for help with interest rates and late fees. Ask them what types of payment plans they offer for people who have fallen on hard times. Also let them know if you have fallen on hard times due to a medical illness or a natural disaster and offer to send them proof. You may find they are more accommodating than you would think.

The lending institutions want to get all of the money they have lent out back but they know a certain percentage of people will default on their loans. If you offer to pay back a percentage of your debt you elevate yourself over the rest of the people who are past due. Your creditors will help you if you keep them in the loop. Most of all contact them early and often. Make sure they know your intentions. The longer you can keep your debt out of collection status the better off you will be. After they sell your loan to the collection agency they won't talk to you again.

Skip the credit counseling agency or debt repayment plan and work out a deal with your creditors all by your little ole self. You can do it and you will be better off in the long run.

Answer 5

they don't work. they promise a lot, do little, and charge you money to do something you should be learning to do yourself. Joining a debt management plan will be treated on your credit report as if you filed a chapt 13 bankruptcy