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Debt Consolidation

post #1 of 18
Thread Starter 
Not that I necessarily want to butt into anyone's personal life here really but I was wondering if anyone knows anything about debt consolidation? If you want to IM me privately that's fine. So I racked up some credit card debt, a good amount actually and I was thinking about looking into one of these places. I saw one advertize on tv today so I just went to the site and filled out the form for them to contact me. But is there a catch to these things? How do I know if a company is a good one or not? My boyfriend did one for his school loans and it seemed to be a pretty good deal.

Here is the site I saw advertize and contacted:

Anyone hear of them? Better yet anyone have any experience with this? Even if someone in a legal field knows anything about it, please let me know.

Like I said, PM me privately if you don't want it to be known here, thats fine.

post #2 of 18
I wouldnt do it unless absoultely nessasarry... Most of the "debt releif" companies are owned by the credit card companies .... It looks simliar to a chapter 13 bankruptsy on your credit report ... If you need relief call all the card companies and tell them your thinking of filing for chapter 7 many of them will give you a better deal than consolidation or relief companies will..
post #3 of 18
Thread Starter 
ok, sorry what does chapter 7 and chapter 13 mean?
post #4 of 18
Go to a bank... it's cheaper. Also cut up the credit cards. A debt consolidation requires surrendering your credit cards, having the accounts closed and cutting the cards up.
post #5 of 18
Thread Starter 
Originally Posted by Natalie_ca View Post
Go to a bank... it's cheaper. Also cut up the credit cards. A debt consolidation requires surrendering your credit cards, having the accounts closed and cutting the cards up.
What do you mean exactly? How does this work and what does the bank do? Sorry I just have no idea how this stuff works. I don't carry the cards around, but they aren't cut up. They are hidden away in my closet on the shelf.
post #6 of 18
Originally Posted by Jen View Post
ok, sorry what does chapter 7 and chapter 13 mean?

The only thing I know about this is that a friend of mine and her husband did it. I think it was a last resort; she told me she owed $30,000+ on credit cards. This was just her; I don't know if her husband owed a lot or anything. I thought she would have to destroy her credit cards, but she's still using one (at least). Unless she'd win the lottery, I don't think she had any hope of paying it off because of the hideous interest.

I checked into school loan consolidation several years ago when I was about two years away from paying them all off. (I'd gone for a second degree later in life.) My monthly payments would have been less but it would have taken me five years to pay it off instead of two, so I didn't do it.

I think Sharky's advice is sound. Good luck!

Cheers, from

p.s. Just saw Natalie_ca's advice; also good. Call your bank and make an appointment with a financial advisor. It should be free.
post #7 of 18
Do you own any real estate? If so, then you can consolidate your credit debt into a monthly mortgage on that instead. The interest would be cheaper and if you have equity, then you can also draw from that for your expenses instead of using credit. Additionally, you can deduct any interest you pay on your Federal Income Tax return.

If that isn't an option for you, you can set up your own "debt consolidation" plan without having a company do it for you. All they will do is make you quit spending on credit - you can do that on your own - and they will attempt to negotiate with your creditors to get you either 1) a lower rate of interest so that your minimum payments are lower or 2) a debt-reduction plan. The debt reduction plan is essentially your agreement to pay a lower amount than you actually owe, sometimes it can be pennies on the dollar, but be very, very careful. As other members have advised, this normally means a Chapter 13 Bankruptcy (debt reorganization) and that will stay on your Credit Report for 10 years.

The best thing you can do is of course, stop spending money on credit. Put yourself on a cash-only basis until you have paid your credit down to a more managable amount. If you MUST put something on credit, then be sure to pay that off at the end of every month instead of it adding to the balance. Honestly, the best thing you can do is to plan a workable budget and don't exceed it. If you don't have the cash to buy something, then save for it instead of whipping out a card to buy it. Try to make at least $100 more of a payment than the minimum required and don't resort to making large cash payoffs if you fall into a little bit of money - just continue making the minimum payment plus the additional and while it does take time, you will chip away more quickly than if you make just the minimum payments every month.
post #8 of 18
My daughter looked into doing this on her school loan and credit cards. But if you work it out carefully on the annual rates of interest, you are actually paying a lot more at the end of the day, even if your monthly bills are lower. It is far better, as suggested, to contact all the companies you owe, work out yourself what you can afford to pay each month, and offer to divide it up betweeen each company. Then DO cut up your cards so you are not tempted ever to use them and NEVER default on any payment. MAke sure the amount you pay is the maximum you can afford, but that it is affordable. If you really cannot do that, then go to your bank, who know you, and throw yourself on their mercy. They are more likely to give you a better deal.
post #9 of 18
Nope we don't do that.Thankfully we've never HAD to.We don't have any credit cards,so that helps.
post #10 of 18
Having worked for a credit card company I'll do my best to give you some advice. With the new bankruptcy laws that are in effect now you will have to go through debit consolidation before you file, so the whole process can be a bit rough. If I were you I'd contact my credit card companies individually and see if you can work on payment arrangements with them on an individual basis. The usually will have something in house that doesn't effect your credit as much a debit consolidation or bankruptcy. Here are some words of wisdom that I hope you follow: DO NOT GET A CONSOLDATION LOAN! These are unsecured loans that work like a credit card but have a fixed payment. The credit card and loan consolidation companies will try to sell them to you, and I've only seen them work two times out of one hundred.

If you need anything else let me know!
post #11 of 18
Can't you just consolidate everything with a bank loan?? Thats what I did with my college debt/credit card debt.

But then, I don't know if we have those "consolidation" companies in Canada..
post #12 of 18
Originally Posted by Trouts mom View Post
Can't you just consolidate everything with a bank loan?? Thats what I did with my college debt/credit card debt.

But then, I don't know if we have those "consolidation" companies in Canada..
The problem with this is that if she has a lot of credit card debt, a bank is usually not going to give her that big of a loan and if they do it will be on a high interest rate.... my advice Jen? I tried a consoldation thing and it did not work the way they promised it would, I would have been better off filing bankruptcy
post #13 of 18
Originally Posted by Trouts mom View Post
Can't you just consolidate everything with a bank loan?? Thats what I did with my college debt/credit card debt.

But then, I don't know if we have those "consolidation" companies in Canada..
The credit laws in Canada are different from the US. It has something to do with the interest rates that banks are allowed to charge and the payment structure.
post #14 of 18
Earlier this summer the Oprah show had a feature on "the Debt"diet".
The families had to list out each credit card and amount owing. They them contacted each company to see if a lower interest rate could be done.
Then the loans were paid off-starting with the minimum pmts on all but the one with the highest interest rate or conversely you could start with minimum payments and the lowest balance one gets and "extra" money applied. After one is paid -the next one on the list gets tackled and so on until all paid off.
They also recommended selling any extra items that you don't use. I remember one family one of the daughters had like 200 pairs of blue jeans!!
I would recommend cutting up all the cc for one can be kept for emergencies.
Alot of those debt consolidation loans do not tackle the issue of money management.
post #15 of 18
I think you have gotten some pretty good advice so far...

I am/was in a similar situation. I have CC debt and I looked into doing the consolidation thing but once my mom explained to me how they work and how they effect your credit score I decided to tackle it on my own.

The best thing for me was to cut up my cards- although I do still have one card *sigh* and just continue to make payments. I also called my CC companies to try and get a lower interest rate- I just told them that I wasn't about to rip them off and I wanted to get them their money I just needed a little help, such as a lower interest rate. I kinda made it into a sob story but it worked! They didn't lower it by much but every little bit helps... it's getting to the point where I've paid off a lot since the last time I called and I should do it again. When I first called I had one company that wouldn't lower it if I remembered correctly because I was over my credit limit- but I paid it down some then called again and they were a little bit more gracious- so I'm hoping for some major improvment this time!

I have 3 cards total and I always pay at least $100 on them each month which is a decent amount over the minimum... but I think I might sit down tonight (which I was planning on doing anyway- bill time!) and look into what GailC suggested- paying only the minimum on one and paying the most you can afford on the highest interest one...

Anyway- it takes a while so don't give up!

It's kind of like learning to eat better/dieting... instead of watching every little calorie/fat gram/etc. you have to watch where every penny goes!
post #16 of 18
I don't know how things differ in the US, but if you file for bankruptcy here in Canada you will have no credit for a number of years, i.e., you won't be able to get a credit card or a bank loan. Our daughter got in over her head with her cell phone account when she was 18 and filed for bankruptcy. She is now 26 and still could not get a loan for her car without her dad and I co-signing. She still cannot get a credit card.

It's only my opinion, but I would try to pay the credit card balances off without going into bankruptcy. The other thing that is a must is to put those cards away (cut them up, give them to your parents for safe-keeping, whatever you need to do in order not to use them).
post #17 of 18
I heard to put your credit card in a ziploc with water and put it in the freezer. Impulse buys are impossible because you can't microwave it to defrost or chip away at the ice without ruining the credit card. By the time it defrosts, you've had time to rethink the impulse buy. Not good for emergencies though, I suspect.

I was never good with money and credit cards until my husband sat down with me and we crunched the numbers. It was an eye-opener! With the interest (and minimum payments) you will end up paying for the item many times over! Yikes!

Cheers, from
post #18 of 18
Thread Starter 
hey thank you all for your help. well i will definately not be doing this debt consolidation thing. i have not used the credit cards in quite awhile, my problem is making the monthly payments. I lost my job in may and just found another job this month. waaay too long for me I was beginning to freak out. so because of that I got really far behind on payments. plus a couple times I had to pay rent with the credit card heh. rrgg!

anyway, i cannot use the one credit card right now anyway because I have not paid the monthly amount. plus it is over the credit limit. ya I really screwed myself over on that one didn't I? I am never ever getting credit cards again, this is ridiculous.

thanks though a lot I appreciate it.
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