debt consolidation

Are those non-profit debt consultation companies bogus? I see them advertising on tv all of the time saying how they can lower your monthly payments.

We have 2 Best Buy cards that are never paid on-time. They are due on the 27th of every month. Unfortunately, we get paid every 2 weeks and usually our mortgage is paid with our 1st paychecks of the month. I called HRS USA, which is where our Best Buy payments are sent & explained about a financial difficulty paying on time. The lady I spoke to said we could change the dates, and I said I'd like to. So, she asked me what was a good date, so I suggested the 30th or 31st, and unfortunately she said no. They can only go as far as the 27th!

I hate paying the minimum payments on our debt It gets us nowhere! Our credit union and Wells Fargo has denied us for a loan to pay off the bills because we have a high debt ratio to income!

Any suggestions? I look at it this way: as long as my mortage, home equity, water & electricity gets paid that's all that matters. I hate for my late payments on our credit cards, though, to go on our credit rating.

Tigger, we just took out a consolidation loan, because it was a small(ish) amount we were able to do it unsecured (not secured on the house). I have to say, I think it was worth it for us, we used it to pay off our credit cards as we had just gotton into arrears with one of them, which is NOT good.... so we used to loan to pay the cards off and that made our credit scoring much better which in turn, put us in a better position to get a new mortgage (as we're moving)
We borrowed £3000 and the monthly payments are only about £90 a month, which saves us loads as we were sending about £200 a month off to pay for the cards!!
We had trouble at first getting a loan because of the arrears we had gone in to (though it was onlt one payment, it didn't matter!) and also my hubby is self employed, so we had a bit of a job trying to find someone who would lend to us.... but in the end we did - without too much bother really.... and it has definately helped us out.
I know these kinds of things don't necessarily work for everyone, but I just thought I'd give you our experience.

Of course there is a downside,- that you MIGHT end up paying for longer (I mean, you might spread the payments over 5 years to get the cost down, but then you could have paid your cards off within 3 years without the loan.... ) it really just depends on your circumstances.

Hope that kinda helps!!

I worked for a credit union for a long time. When you apply for debt consolidation loan, they base your approval the same way they would any other loan, car, house, etc. So in order to qualify, you really need to have your bills up to date, and also within the debt to income ratio. What we would suggest is you get everything in order before applying, and only include ones that are necessary to pay off....in other words if you have a $500 Sears card or something, perhaps try to pay that one on your own. That way you aren't asking for more than you absolutely need. Also, if possible, try to pay down as many as you can so your debt/income is lower. The lower the better, they like low numbers in the loan dept!!!

I know its frustrating trying to get out of debt, but you'll do it!! As far as those ones that are advertised on TV, all I can say is that there is usually a catch somewhere ( like an application fee of $300 ), so that it is not totally free!! But it cannot hurt for you to check into it!

I have heard good things about Profina debt solutions. A couple we know was in deep on credit card debt and they were thrilled with the way they worked it out for them.

Credit counseling services work well, too. My ex never paid our credir card bills and I set us up with Genus Credit Management. Its not a loan but they get you set up with one monthly payment and, some of the credit card companies stop the finance charges. The catch is that you have to give up all of your credit cards and acquire no others, until you're paid off.

I tried going through one of those debt consolidation places at one time. The catch was that we had to "donate" one payment to them. I had WAY too much credit card debt for that to make a difference (I had over $50,000 in credit card debt) and bankrupcy actually turned out to be the best option for me. However, I think that if your debt isn't too large and you really are sinking they may be an option. They can get the late charges to stop and lower or eliminate the interest. The biggest catch that they will not tell you about is that using one of those agencies looks as bad on your credit report as declaring bankrupcy. Really. What it says to future creditors is that you could not handle your debt and had to have someone help you out. The other thing to remember about debt consolidation services is that they are there for the benefit of the credit cards, not you. They are making sure that the credit cards get all of the money owed them, no matter what line they tell you on the phone. If you do call, even just to get information, they will put big pressure on you to sign up.

There are other options besides credit consolidation and bankrupcy. You can keep trying to get a consolidation loan, refinance your mortgage, or try a debt settlement. Here in Denver we are starting to get advertisements for firms that will help with debt settlement. There was also an article in Readers Digest on it. Basically, you work with your creditors and make an offer to pay part of your debt (40-60%). They are much more willing to take a partial payment of the debt than have to take a total loss. The biggest catch is that I think it has to be in a lump sum. I'm not 100% on exactly how it works, but I do know that it looks a whole lot better on the credit report than credit consolidation or bankrupcy.

Hope this helps!

Tigger,

I am currently doing debt consolidation (aka consumer credit counseling). Unfortunately, I didn't do my research and am using a for-profit company instead of a non-profit. I pay them $32 a month for their services, and they held my money for a month before they started to pay my creditors so now I have 30-60 day late pays on my credit report.

If you want to do this definitely go for a non-profit, just do some research on some companies. You can find a variety of companies doing an internet search. This is how I found a reputable non-profit company that I can switch to that will cost me $0. I will be ending the current program I am on soon to switch to the non-profit.

The good thing about doing a debt consolidation with a consumer credit counseling agency is that you know when you will have it all paid off. The bad thing is that while you are on the program it doesn't look good on your credit. It doesn't make your credit look horrible, but if you have any major things you will be doing (that requires credit) while you are on the program it will affect you. We are trying to buy a house right now and because of this my credit either can't be used or if it is my husbands is the primary and mine is the secondary. We find out today if my credit can be used as a secondary or if only his can be used.

I used CCCS (Consumer Credit Counselling Service) for a while. I paid them what I could afford and they parcelled it out to my creditors. I did have to give up my credit cards, but they weren't useable anyway because I was in arrears. I didn't max them out and probably could have paid everything off with less than $5000, but I was putting myself through college and didn't have a regular income so I wasn't keeping up with all the payments. The biggest advantage was, it stopped the phone calls.

Their web page is here if you want to check them out. They have an 800 number listed, though I don't know if they handle cases outside Texas.

I understand that you can do a lot of this yourself. There is a book of some kind with letters in it, and you need a copy of your credit report. I can check with a friend of mine about it, he used to own one of these businesses. Let me know, so I don't bug him unnecessarily.

Look around the Web for some good sites on credit and debt. When I had a roommate, she managed to get herself into terrible debt and I did my best to help her out by pointing her towards Creditnet.com and the Bayhouse.com discussion forums. The information there is solid and reliable, and the folks aren't too bad themselves!

But please, please, please don't go to a credit-counseling service. What they won't tell you is that they're funded by the credit card companies and reporting agencies and are there to ensure that they get their money back. Read this article to give you the real story.

Good luck, and let us know how it goes for you!