Bill consolidation. (1 Viewer)

[Dan Whalen]

I'm sure almost everyone here has seen those commercials for Ameridebt and similar places. I was wondering if there are any qualifications or requirements that you need to meet in order to get your credit card bills lowered? It also says it's a non-profit organization, but do you need to pay anything for their services? We are not deeply in credit card debt, but I'd like to get out of it anyway. Anyone know anything about this? Thanks.

Dan

 

[Bill Catherall]

I've heard that using these types of services can hurt your credit rating. I wouldn't use them unless you're looking at bankruptcy.

 

[Carl Johnson]

Just over a year ago I used a debt consolidation service to lower the interest rate on my credit card and it certainly hasn't damaged my credit rating. Since I signed up I have bought a new truck and been approved for my first mortgage.

Make sure you read all the fine print and know what you are getting into before signing up because they certainly aren't running a charity. There is an enrolment fee, a cancelation fee, and a monthly charge of about ten bucks added to my monthly credit card bill. Even after adding up all of that stuff it is much better than making the minimum payment on a large balance.

 

[Peter Apruzzese]

Dan, even though you say you're not that deep in debt, it's worth at least a call to them - sometimes you need the unbiased eye of a third party to give you the real picture. We went through the procedure here in NJ a few years ago and it was nearly painless. They negotiate a lower interest rate, try to get any late fees removed, while you agree not to try not to incur any new CC debt during the program. They get a monthly payment from you and take care of all the CC bills, as well as getting you started on a realistic budget. When you see your credit report after a few months in the program, it looks great. If you'd been having trouble getting all the bills paid each month (as we had), it's a relief. Now that we're out of the program (it took a couple of years), our credit report is super clean. I repeat, it's worth the initial consultation.

 

[Ryan Wright]

Let me tell you how these places work:

They call up your creditors and say, "Hey, John Doe is going to declare bankruptcy. He can't pay his bills and you're going to get stiffed. However, if you reduce his interest rate to little or nothing and accept payments of $x per month, he can pay the debt off."

The creditors agree to it because getting their money back without or with little interest is better than nothing.

If you have bad credit, can't pay your bills, make multiple late payments, have creditors calling and harassing you, etc, then this is the best way to go. It's far better than bankruptcy and WILL improve your bad credit record. However, if you currently have excellent credit, it will actually HURT your record! Many creditors will place a notice on your credit report that states while the account was paid in full, it was NOT paid according to the original terms of the agreement. So, if you've got great credit and can afford to make the monthly payments, a program like this will likely only hurt your credit report. If you are in big financial trouble and are not going to be able to pay your bills, or are making late payments on a regular basis/etc, sign up. In that case, it will help.

 

[Peter Apruzzese]

Ryan's take on this is probably correct (Ryan's right ). It describes the situation we were falling into perfectly. Unless you are in danger of this, it is probably not worth your while to do it. If you simply want to clear up those nagging accounts, maybe some kind of home equity loan would be a better bet.

 

[Janna S]

Nonprofit Consumer Credit Counseling, which I believe is available in most states, has provided similar services for years in a very credible manner. They do the coordination with creditors, help you assess your financial status, set up payment plans, etc.

When I worked directly with debtors years ago, those who were working through CCC were given favorable preference (we didn't close down their accounts, continue to send nastygrams, etc.)

If you even thinking about doing something like this, whether you are moderately in debt or you are out of control and in really deep shit, I urge you to check with CCC before going to one of these new, advertising-heavy, flash operations.

 

[Ron-P]

Many, many moons ago when my wife and I first got married we were had CC debt and went to CCC. We were told flat out that going on their program will show up as a negative impact on our credit report.
These companies offer up nothing that you cannot do yourself. Many CC companies will lower rates if you call and plead your case.
Work up your own budget and goals. STICK to it and you can pay it off yourself and keep your good credit standing.
Peace Out~

 

[Ryan Wright]

If you simply want to clear up those nagging accounts, maybe some kind of home equity loan would be a better bet.

I'd advise against this. You would be trading unsecured debt for secured debt. What's the difference, you say? Well, if you stop paying your credit card bills, they can harass you and destroy your credit, but that's about it. If, on the other hand, you stop paying the bills on your home equity loan, they can foreclose and take your home away from you.
If you get yourself into a bad situation (lose your job, be disabled in an accident, whatever), you may find that you still have enough money to make those mortgage payments, but that's about it. In such a situation, if you've got a second mortgage or home equity loan tacked on there, you're in trouble. It's never a good idea to trade unsecured debt for secured debt if you don't have to.

 

[Paul E V]

I've got @ $10K in CC debt and, althuogh I've been late a few times (due to my own stupidity :b ), I haven't had any problems paying the bills and usually pay a little extra just to get them paid.

I'd like to get lower APR but I don't feel the need for consolidation

 

[Craig Chatterton]

Many CC companies will lower rates if you call and plead your case

I completely agree with Ron. Most Credit Card companies will work with you if you explain your situation to them. Be up front with them BEFORE you have late payments. They'll appreciate that a lot more than you explaining why you haven't paid them yet.