Anybody have experience with Debt Consolidation?

Discussion in 'Archived Threads 2001-2004' started by Ross Williams, Jan 29, 2002.

  1. Ross Williams

    Ross Williams Supporting Actor

    Joined:
    Feb 9, 1999
    Messages:
    653
    Likes Received:
    0
    I'm doing some research for my girlfriend who is in over her head with her credit cards. She realized the error of her ways a few years ago, but has gotten nowhere in paying them off. The cost of the interest stops her from gaining any ground.

    I was wondering if anybody has used any of these debt consolidation companies that I always see on TV. After reading around a little, it sounds like a lot of these places are scam artists, not helping at all or making it worse.

    Does anybody know of a reputable company, that charges little or no money?

    Heck, any advice on the subject would be helpful.
     
  2. Craig

    Craig Second Unit

    Joined:
    Oct 20, 1999
    Messages:
    467
    Likes Received:
    0
    According to Clark Howard, Atlanta's own consumer advocate, there are a lot of scam artists at work. Apparently the law is pretty broad and allows almost anyone to qualify as 'non-profit' in this area. Once most people hear non-profit, they think they must be legit. There are some legitmate ones out there, but I'm not sure which ones they are. You might go to ClarkHoward.com and take a look.
     
  3. Keith Mickunas

    Keith Mickunas Cinematographer

    Joined:
    Dec 15, 1998
    Messages:
    2,041
    Likes Received:
    0
    I've heard from sources I can't recall that if someone uses these debt consolidation companies it will have a similar effect on their credit history as if they had declared bankruptcy. At least people may look at it in the same light. So if she's going down this road, tell her to ask the organizations what effect it may have for future loan applications.

    And one other suggestions, if she does this and you two happen to marry and plan to buy a house, buy the house by yourself before you are married if at all possible. That way her credit won't affect your home loan. That's just my $0.02.
     
  4. Dheiner

    Dheiner Gazoo
    Supporter

    Joined:
    Jun 13, 2001
    Messages:
    2,757
    Likes Received:
    144
    Location:
    'skonsen
    Real Name:
    John Dhein
    If (and this is a big if) she has cut up all her credit cards, except for one to use only for reservations and such, I suggest she contact, via letter, all her creditors, and ask them politely for the best possible interest rate.
    I have seen this result in reduced rates in several instances with people I know.
     
  5. Ben Motley

    Ben Motley Supporting Actor

    Joined:
    Mar 3, 2001
    Messages:
    738
    Likes Received:
    0
    Well, I just keep my eyes peeled for the offers. Don't know how universal my situation is, but I've been paying off 12 grand since last July. I just keep accepting low interest balance transfer offers from new cards, and when the deal expires, off the debt goes to another card. I just last week got a new Mastercard with no APR, no balance transfer fess, and get this shit, ZERO % interest for a year. I'm down to 5 grand, so if I half the one grand a month I was paying, I still pay everything off by Jan. 2003. I'm flying so high right no, I can't tell you how high.

    Maybe you can find a deal like this, maybe not. Good luck. It was an AT&T Universal Mastercard, by the way. If you want, I'll dig around back at home after work and post the number to call to apply. I also just got a similar offer from Citibank, for 0% on balance transfers until Feb. 2003. Let me know if you want application info.

    Good luck!
     
  6. Ross Williams

    Ross Williams Supporting Actor

    Joined:
    Feb 9, 1999
    Messages:
    653
    Likes Received:
    0
    Thanks everybody for your the advice. I told her she may not want to go down this road yet. She has stopped using all of her cards except one, that she keeps around for some stuff. I told her that she should call all her card companies and ask them for a lower interest rate. Told her if they say no, than to threaten them that she'll move the money to a lower interest card.

    She wants to make it simple though. Having one big payment a month, instead of 5 or 6 that she has to keep track of. I'll look around some more.
     
  7. Jamie E

    Jamie E Stunt Coordinator

    Joined:
    Mar 30, 2000
    Messages:
    96
    Likes Received:
    0
    I had heard that California offers free credit counseling, so you may want to check out what your state government offers. I looked at the State of Washington web site and found the following page of the Attorney General Consumer Protection Division, dealing with debt and credit issues. It all looks like sound advice to me:
    http://www.wa.gov/ago/consumer/credit.html
     
  8. JohnRice

    JohnRice Lead Actor

    Joined:
    Jun 20, 2000
    Messages:
    8,825
    Likes Received:
    220
    Real Name:
    John
    You might check to see if there is a Consumer Credit Counseling (that exact name) service in your area. They are a United Way agency and are probably the best choice. Most others charge such outrageous fees that it really defeats the entire purpose.
     
  9. LDfan

    LDfan Supporting Actor

    Joined:
    Nov 30, 1998
    Messages:
    724
    Likes Received:
    0
    Try Consumer credit counseling service in your area. There are some pro's and con's to using them but it's probably the best choice if the payments are getting out of control. I'm using them and have been for about 2.5 years now. I made some big errors in using credit cards over the past several years and racked up a lot of debt. Basically this is how these credit counseling places work. If you want to use them they set you up on a debt-management program. They will contact all your credit card companies telling them you are a client and the credit companies will drop the interest payment, some of mine went from 20% down to 6-7%. Also you have the counseling service take one lump sum out of your account on a particular date of the month, usually the 1st or 16th and they send the payments for you. It has been working really well for me.

    However there is a down side. It will show up on your credit rating that you are using the service. It is considered a disfavorable thing to do but it does look better than having a lot of maxed out cards. Since I've been in the program I have got a new car and been approved for a mortgage.

    Good Luck,

    Jeff
     
  10. Francois Caron

    Francois Caron Cinematographer

    Joined:
    Jul 31, 1997
    Messages:
    2,143
    Likes Received:
    0
    Real Name:
    Francois Caron
    Have you checked the bank? They may offer you a low interest loan in exchange for the cutting up of all your existing credit cards except for one (most likely their own). You have a single payment to make each and every month, it can be paid off very quickly (get a four years term or less if possible), and it may not even show up as a debt consolidation on your credit report. At least for me here in Canada, this tactic didn't hurt me one bit when I did it eight years ago. And I easily qualified for a mortgage five years after that. Also, that loan I took out was actually a semi renewable credit margin which is still available to me if ever I need it again.

    The best debt consolidation is one that doesn't look like a debt consolidation, but still offers all the benefits and none of the inconveniences.
     
  11. DanaA

    DanaA Screenwriter

    Joined:
    Nov 21, 2001
    Messages:
    1,843
    Likes Received:
    1
    Maybe I didn't notice it, but does she own a house? Maybe 6 years ago, we had about $20,000 due on credit cards. We took out a second for the amount and payed off our credit cards. The advantage was that the interest rate was significantly lower, the payments were more structured, and, best of all, the interest was tax deductable.
     
  12. Scooter

    Scooter Screenwriter

    Joined:
    Sep 3, 1998
    Messages:
    1,505
    Likes Received:
    10
    Location:
    DFW Area Texas
    Real Name:
    Scooter
  13. Jeff Aguilar

    Jeff Aguilar Stunt Coordinator

    Joined:
    Jun 30, 1997
    Messages:
    228
    Likes Received:
    0
    Location:
    Lacey, WA
    Real Name:
    Jeff
    A little caution on using these services.

    These programs are non-profit, but do you know who started them and helps maintain them? Credit card companies.

    Going through Consumer Credit Counseling shows up on you credit report like a Chapter 13. While you are in the program, you cannot buy a house and financing a car will be very costly. It takes 2 YEARS after FINISHING this program to qualify for FHA guidelines to purchase a house, 4 YEARS for Conventional financing. But then again, if you do not get help for your debt, you will not be able to buy a house. Just be informed as to what these programs will do to you credit reports. Good Luck.

    Jeff Aguilar
     
  14. Dave Reichert

    Dave Reichert Stunt Coordinator

    Joined:
    Dec 29, 2001
    Messages:
    56
    Likes Received:
    0
    What I had done when I was in some credit card trouble was get a debt consolidation loan, but not really call it a debt consolidation loan. Basically I refinanced my Jeep and requested additional funds which I used to pay off the credit cards. Worked out pretty good, and now I'm paying like 6.7% interest on the cards instead of 15-20%. Don't know if that's an option for your gfu or not, but it's something to look into if her car is financed.
     
  15. LDfan

    LDfan Supporting Actor

    Joined:
    Nov 30, 1998
    Messages:
    724
    Likes Received:
    0
    Jeff,

    It isn't true about not being able to qualify for a car loan or a FHA mortgage. I did for both after being in the program for one year. I qualified and have been living in my first home for the past 2.5 years and I am still in the program. Got my first brand new car also while being in this program. The interest rates aren't bad on either loan too. My home loan is 7.75%. Not great but not too bad either. These programs are the life ending moves that some people say they are. They even won't interfere with getting a gov't security clearance either.

    Jeff
     
  16. Jeff Aguilar

    Jeff Aguilar Stunt Coordinator

    Joined:
    Jun 30, 1997
    Messages:
    228
    Likes Received:
    0
    Location:
    Lacey, WA
    Real Name:
    Jeff
    Jeff,

    Maybe I should clarify. Where I live, Washington State, what I posted about home loans is correct. I do this for a living. Under FHA guidelines bankruptcy or CCC due to medical reasons can get a loan within 1 year, but any other reason it has to be two years. There are factors that can be in your favor. Like not having 30 day lates for the past year or two with your rent or house payment. But those things are looked at very closely because you are in a higher risk catagory. There are exceptions to every rule, but as a rule of thumb, this is the way it is. If your CCC was not due to a medical reason and you were able to get a home loan, than count yourself VERY lucky! Lenders can approve someone on a case by case basis but if the loan goes bad within the first year, that lender buys back that loan. That is why most lenders will not approve a loan under those circumstances.

    I can see a person getting a good rate on thier car loan if they have a house purchased and have a pretty good payment history and then go out and get the car. Is that what you did?

    Jeff
     
  17. LDfan

    LDfan Supporting Actor

    Joined:
    Nov 30, 1998
    Messages:
    724
    Likes Received:
    0
    Actually I bought the car about 6months prior to getting the home loan. Guess it helped that I'm married and my wife is on the mortgage too.

    Jeff
     
  18. Jay Heyl

    Jay Heyl Stunt Coordinator

    Joined:
    Apr 19, 1999
    Messages:
    142
    Likes Received:
    0
    Asking her creditors for lower rates is an excellent idea. I've done this a number of times and over half the time they immediately lowered the rate by at least a few points. A couple times they shaved 6 or 8 points off. Some of my creditors were less than accomodating about this, but that simply assured they were the first ones paid off (and no longer making money off me).

    If she's computer literate, I suggest checking out Debt Analyzer (available at download.com). This might make it easier for her to handle the current situation with multiple creditors and will certainly point out the best way to pay everything off. Ordinarily when you're in debt, spending more money is the last thing you need, but this program is worth every penny. There's a lot of comfort in having a specific plan and knowing exactly how long it's going to take.
     

Share This Page