Credit card Debt and Consolidation

[Draco]

Hi all,

I am considering a credit consolidation. My debt is getting out of control, I can't manage it each month anymore and it's stressing me to no end, and I am struggling with paying my rent each month!

I was wondering if anyone went to credit consolidation lawyers and such? Did it help you? Any advice/warnings to offer? What company did you use?

 

[stephanietx]

In my opinion, doing debt consolidation doesn't really teach you anything.  I've known folks who have done it and they've ALL had problems with it.  I would really recommend you do something like Dave Ramsey's Total Money Makeover or Financial Peace University.  It really does work!  My husband and I started following his steps many years ago and have learned soooo much and gotten debt free from credit cards.  You can check him out at http://www.daveramsey.com/category/tools/

 

[carolina]

In my opinion, doing debt consolidation doesn't really teach you anything.  I've known folks who have done it and they've ALL had problems with it.  I would really recommend you do something like Dave Ramsey's Total Money Makeover or Financial Peace University.  It really does work!  My husband and I started following his steps many years ago and have learned soooo much and gotten debt free from credit cards.  You can check him out at http://www.daveramsey.com/category/tools/

Sorry, but I have to disagree....
I have done it.... And I have learned. I am not sure what some people think that debt consolidation is magic and your problems disappear? Nope - not so. Do you pay less? Yep, you do. Much less? In the end, I am not sure. It does take time. In my case it took many years - MANY.
I did not do through these debt consolidation firms you see on TV - I did through a law firm, so In case I got sued I would be represented.
Do I think it is for everyone? Nope..... But in my case I had 2 options - Debt Consolidation or Bankruptcy..... And frankly..... I wanted to pay for my debt.... even if by negotiating with the companies.... even if to pay SOME - I wanted to pay - because I did that debt - I know that.... But I could not make the minimum payments - it was as simple as that. For different reasons in my life the situation got out of control and I had to make a choice. Had I had a third choice... I would take it....
I am now out of debt, and not looking into making any. I paid off my car and I am not buying another one.... I am not getting a card either - believe me, the amount of offers I get now that I paid my debt is insane. But to me it is simple - no money, no purchases.
I have much much to learn about spending and savings sure I do, but to say you don't learn anything... I have to disagree... I know quite a few people who have done debt management successfully..... And just as many who got ripped off...

 

[Draco]

I spoke to a few companies to learn more. One was really very thorough. We spent 2 hours on the phone going through every fine tooth at my debt and balances. He took the time to offer suggestions and pros and cons of each option. He made a few suggestions before bringing up consolidation.

He even went through my monthly budgets and offered many suggestions on how I can cut back and save.

I decided to go with this company as they were extremely helpful in every area and I learned so much. They send out monthly newsletters on how to manage debt, stretch the dollar, ways to make more money and so on. It is more than just consolidating debt, it is an educational experience.

I really felt like this company cares in comparison to the other 4 I spoke to, those that went right into the consolidation option without first helping sort and explore options.

This company cut my interest rates in half, my monthly bills about 65% and estimated 4 years of paying off debt whereas I was looking at 13 years. If things work properly, I can actually start a savings account too.

The only downside.. Or a plus, depends how you look at it, they close all cards associated with the consolidation plan. It's somewhat bad as it temporarily affect the credit score, but good so you won't charge more to the accounts.

The fees are cheap, 4 bucks per charge card per month. The other companies wanted upward of 10 bucks a card a month !

I hope I am not making a mistake, but I feel more at ease and less stressed financially already. I ran a quick monthly budget after and the guy was right, I have 200 bucks left over each month with the plan. That would help!'

 

[trouts mom]

When I was in college, I had a lot of credit card debt. I just rolled them all into one loan. I didn't need lawyers. I got my uncle to cosign the loan for me and paid it off in 3 years.

I don't go into debt anymore, I learned my lesson.

 

[parsleysage]

Karen, it sounds like you might have found a really good company!  That's awesome that he took the time to go through your finances & give you options.  It seems like most companies would not do that.  Generally speaking I agree with Stephanie, many companies are not really reputable as I think you've noticed in speaking to the other companies.

I am going through the Total Money Makeover right now, actually!  I just started on Monday so it's funny that it was mentioned in this thread.  I am struggling with my credit card debt after a bunch of unfortunate events coupled with a pay cut last year - I want to pay everything off and start saving for a downpayment and I'm using the TMM as a jumpstart.  Karen, you could even still do the TMM along with the debt consolidation - it's just a way to help you pay down your debt faster.  You start by saving $1000 for emergencies, then you throw every extra penny you have at your debt via the debt snowball (which is a really cool technique), then once your debt is gone you save 3-6 months of expenses.  Those are the first 3 "baby steps" - there are 7 in total.  Here's some more info about it.   If you or anyone else in this thread wants to do it, I am actually looking for accountability partners.  I have the book so we don't have to buy software or anything.  I've talked to several of my IRL friends and they've expressed interest but I'm not sure about the follow-through LOL.  Anyway, we could share as much or as little as you want, set goals, celebrate when we reach goals, etc.  No pressure - let me know!

 

[Draco]

I will have to look in that money management thing!

Aside from the obvious of getting out of debt, my goal is to start a savings account and start saving!

 

[denice]

It's good they close your accounts. I have known people who took out a consolidation loan and then charged up their credit cards again. They ended up worse off because they had the consolidation loan on top of their credit card debt. Credit cards are easy to get into trouble with. I now have only one with a low limit for online purchases, making reservations, and car rentals if I need one.

 

[ruthyb]

I have been i major debt and I went into a debt cosolidation scheme, they charge you loads and hardly pay your creditors anything. I stopped it, contacted my creditors, explained my financial situaion and offered them a minimum payment each month, over here I don'tknow if its different but it shouldn't be. I sought legal advice and they told me that even if I offered them as low as £2 a month they have to take it as its an offer of payment. Motgages and council bills are different you have to pay them more but small things apparently don't matter too much as long as you are paying something. don't get yourself stressed over this, seek some advice to see where you stand.x