S2PIDSTYLE

Well folks i have currently about 17-20k in CC debt

I know, but i had to live off my credit cards about 2 years ago for 6 month.

Well now i am pretty much making interest payments on most of the cards because of the high balances and high interest rates. My credit score is in the low 600's so i cannot get a debt consolidation loan. So I have been looking into the programs that you pay a fee and they negotiate your balances down and stop the interest. YOu then make payments to them and they work out the rest. One of my friends did this and he turned 13k of debt into 7k worth of payments.

Only problem is, is that while you are in the program, it ruins your credit. Credit is pretty much restored 6-12 months after the program finishes.

So my main points are:
I probably wont be trying to get any new credit for the next 4 years because i have been trying to pay off all my credit

As long as my credit is restored I am ok with all of this

If i can pay almost half less and be debt free in 4 years making less payment than i am currently that seems great.

What i would like to know from you guys is
A) have any of you done this kind of program before?
B) is it worth it based on my quick synopsis?

Thanks in advance for any help!!

B.C.

I heard about these programs, but keep us informed if it works out. I'm always laughing at these commercials, but I guess there is some truth to it.

Keep us updated, and good luck to you Jason.


(NOONE SELLS ANYTHING TO JASON ANYMORE FROM S2KI)

S2PIDSTYLE

Thanks BC, I will keep the updates ringing in as i get more info.

(Sell to me cheap you mean!!)

jlammy

OK - here's how it works.

You pay them some money and they negotiate with the debtors for you. This means that you have to let all your bills go delinquent or so and that's where your credit will fall. Meanwhile you need to put money in your savings account and start saving up for a payoff.

The CC company wants to be paid so sometimes they accept a 50% payment, more or less, but in turn your account is filed as a charge-off, so your credit falls from a late to charged-off, which isn't all too bad after a few years.

The advantages are:
1. Pay off your debt at 50%. The person who handles your account gets commission based on how low they can get your creditor to settle for.
2. No nasty calls from creditors since you are still attempting to pay them.
3. NOT a bankruptcy!

The disadvantages:
1. Your accounts will show up as either settled or paid less than full....or something like that. Future credit companies may frown on that.
2. Don't expect anything on credit for a few years after this process.

*** IMPORTANT ***
3. The creditor does not have to accept your settlement offer, in fact, they may turn around and take you to court for the full amount. When this happens the company you use for debt settlement may not be able to assist you. Bank of America is notorious for doing this. If the court awards them the case then you will HAVE TO PAY THEM. If you don't they will place a lien on your paycheck and deduct that from there.

4. The amount of debt forgiveness is a TAXABLE INCOME ITEM. Not sure how good your tax guy/gal is, but yeah, the IRS will be able to tax the amount that the creditor forgives you.



That's all I can think of at this time.....

tantheman

Make sure you ask if this will lower your FICO score, since they usually do. When I was underwriting home loans, these type of debt consolidation or relief negotiations on a borrower's credit reports will usually kill if not hinder the loan process, some actually lowered the score dramatically so that we denied the loan just because of score and that debt relief statement.

Tan

ADiSKOTEC

Correct me if I'm wrong, but don't these debt consolidation programs change your debt from unsecured to secured?

edirtaynine

i actually was in a program back in college when i was over my head in debt with credit cards. they reduced my total debt by almost half. i had to close all my credit card accounts. i paid the consolidation company one set payment amount every month. it f**ked up my credit score and history, but im ok now (this was 7years ago).

one thing to keep in mind... this is basically the last step right before bankruptcy. it is better than bankruptcy, but only marginally better. good luck.

Bert05GPW

Can't he do this on his own without paying someone to do it for him?

S2PIDSTYLE

Good question!!

Can I?

ADiSKOTEC

I'm sure you can, but you would have to deal with the negotiating and back and forth calls. Your time and morale would be better off if you had someone do it for you. But I'm just speaking out of my ass. I don't know exactly what it takes for you to take this on on your own. Good luck!