Debt consolidation or not?
I am having a hard time choosing between solution to my debt problem. i have around $8000 in credit card debts right now. All of them are in collection agencies now and I have no means in paying all of them and all are delinquent too. I've been thinking of doing a debt program. I've been looking around and have seen debt consolidation programs, debt settlement programs, consumer credit counseling, credit counseling agencies and debt management plan... and I have a feeling there are more I don't know of. My question is which one would be the best option. By now I know my credit is bad and I have nothing to put into collateral. I'm not really comfortable in doing anything online because I want to see and talk to someone face to face. What are the fees involved in the programs? Do you have to pay them monthly too? I just need all the information I can get right now.
Public Comments
- This is a very bad idea. For starters these companies don't do this for free, second, are you going to 100% sure that ALL your payments will go to the credit card companies and not in there pockets? You mentioned you don't have money to pay all of them, so how are you going to pay if you consolidate? The best thing to do is if you have a full time job, get a part time job and use that money to pay off your debt. Doing this will allow you to pick which credit cards you want to pay off first and you know that all your money is going to that company. Its also free this way.
- Debt consolidation programs usually leave you worse off than you were originally. My suggestion would be to call your creditors and ask them if they could get you onto a payment plan that will work for you. Also, pick the card with the lowest rate and ask them if you could consolidate all of your debt to their card with the agreement that you will close other cards. They may do this, and then you will only have to make 1 payment per month and deal with 1 company when you're having trouble making payments. If this isn't an option, try to make your minimum payments while any extra money goes to the card with the highest interest rate.
- This is a good question because the two things (debt consolidation and credit counseling) are vastly different. A debt consolidation loan is just that, a loan from a lender to pay off bills. Often the bank will make you show proof of the bills and then cancel your cards. However, if the accounts are in collections banks may shy away from lending you the money. A good solution to this would be Prosper. Prosper is an online community of people that lend money to people. When you open an account on Prosper they run your credit and classify you (A, B, C grade) and then you do a little bio of yourself and what you need the money for. Various people will "bid" on how much they will loan you and when the entire amount you need has been reached Prosper will fund the loan and deposit it into your account. Payments are set up on a direct withdrawal from your account over a 3 year period. It's really a great system! Credit counseling can be good too. Credit counselors will contact all the lenders and arrange to have your accounts frozen and an interest rate fixed. Then they set you up on a repayment plan (usually 3 years) and you make one payment to them and they disburse the funds. The credit counselors will charge a small fee (usually about $25 a month) for paperwork. Which isn't so bad. Posible problem - If your accounts are in collections with an outside party - in other words the debt has been sold to a collection agency - this probably won't work for you as counselors work directly with the credit card companies, not collection agencies. If you like you can come onto my site here at: http://www.1-800badcredit.com and read more about debt consolidation and credit counseling. Many of my pages have an "online assessment" you can take to see which solution works best for you. I have referrals on the articles to various credit counselors or to the assessment page. Once an organization is recommended to you you can usually call them directly to speak with someone. All I ask is that you remember my website and tell them I referred you. I get $3 per referral. You are on the path to recovery. It's not easy, but at the end when you are debt free it is so liberating! Good luck to you!
- If a person has accumulated a large amount of credit card debt due to multiple credit cards, the need for a proper counseling for credit card debt consolidation can't be understated. Credit card debt consolidation counseling helps a person get vital insights into the facts that can help him get control over the credit card debt. Credit card debt consolidation counselors are experts with a good knowledge of debt management, budgeting and behavioral patterns of credit card holders. These services are vital for those struggling to manage their credit card debts. Also called credit counseling or debt counseling the credit card debt consolidation counseling brings immediate relief to a credit card holder. A person seeking credit counseling can get it from two types of organizations. The professional or commercial organizations, and the non-profit organizations. As depicted by its name or categorization, the commercial organizations charge money for their credit counseling sessions and consolidation help on the other hand the non-profit organizations offer free of charge services. Just because the non-profit organizations are free, it doesn't undermine their quality of service. The persons associated with such organizations are thorough experts and have lived the trauma of being under credit card debt themselves and hence bring their vital experience to the credit card holder. When a person approaches a credit counseling agency, the first thing it will do is to take stock of the situation and get various facts about the credit card debt. The credit counseling agency collects data about the income, expenditure and spending habits. It will guide the credit card holder about budgeting benefits and try to inculcate good financial habits. Read more from: http://www.credit-card-gallery.com/article/353,Credit_card_debt_consolidation_and_credit_counseling_great_tools_to_get_rid_of_credit_card_debt
* Some answers may have been provided by Yahoo! Answers.