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Debt Consolidation

Debt Consolidation questions and answers

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Q: debt consolidation?
Hello all, I have a question regarding debt consolidation. I have about 15k worth of debt and have tried applying to two companies for a debt consolidation loan and was denied both times. I thought about trying what one of the other posters suggested , writing to the individual companies threating a voluntary bankruptcy order. I have about 10k in the bank, but I don't want to borrow from that lender because I wouldn't be able to use the money in my account. My credit is only good. What other options do I have? Thanks

A: First thing, you do not need a debt CON-solidation loan. That fools you into thinking that debt is the problem when i is really just the symptom. The problem is the behavior that got you into debt. I know because I did it too, only with a lot bigger number than you. I will say that I am a huge fan of Dave Ramsey - I'll let you do your own research on his website. First thing is: you must get on a budget and determine how much money you can throw at your bills each month. Stop investing until your bills are paid. Have a yard sale. However you can scrape up a dollar within legal means, do it. Here is what I would do: 1) I would take $9K out of savings, leaving a $1K Emergency Fund 2) I would pay off debts from smallest to largest, regardless of the interest rate 3) I would then rebuild my savings to cover 3-6 months of household expenses. After that, it gets fun when you get to keep your money and get rich.

Q: What is the best debt consolidation service?
I have a few credit card that are past due and I'm not able to make the payments. What is the best debt consolidation company to use? Keep in mind, I'm not a home owner. I'm not a student and actually I'm looking for a better answer than the obvious budget and make more money.

A: Stay away from any that charge a fee. Most if not all of these companies will trash your credit. What they do is not pay your creditors for months and then try and settle for less under the threat of bankruptcy. No special skills. They just don't pay. Your creditors do not have to deal with these people because it is your debt. Also, If they don't pay you creditors. You, and you alone are still responsible for the debt. Your creditors will sue you and not the company you hire.

Q: What are the advantages and disadvantages of debt consolidation?
I have two credit cards that I have used over 5 years ago and never paid back. The total of the two cards FIVE YEARS AGO was $1000. Of course, by now, it should be close to $3000 because of all the interests. What does debt consolidation do? More importantly, can it REALLY remove or reduce the interest that built up over the last 5 years? When doing a search for debt consolidation services, I get THOUSANDS of results. Which debt consolidation services are better? Detailed answers would be appreciated. Update: Am I correct to assume that if I leave the debt as it is, I can have it completely wiped off my credit card two years from now as if it never happened?

A: Hi, Jimmy: First, I already answered a related question, so I've copied that answer below after the dashes. If your number one objective is to simply improve your credit, you could just wait it out for another 2 years until the debt is 7 years old. You can then ask for it to be removed from your credit report. If this is your objective, then don't pay the debt. Records on your credit report are good from 7 years of last transaction so any payments or charges you make resets that 7-year clock. Personally, I've never used a debt consolidation company because I've felt capable of trying the same tactics myself. Granted, these companies are professionals and may get special "deals" and privileges that I wouldn't get, but I've still been pretty pleased with my own results. Before using a debt consolidation company, I recommend trying your own hand at it. Contact your creditors. Before you do, determine how much you can afford to pay in a monthly payment. Even better, if you have some money saved up as a lump sum, you can try to pay them off in a couple of chunks. The more money you can give them at once, the better your negotiating power. If you're in collections, ask the creditors by how much they'll reduce the total amount owed if you pay now/in 30 days/in 60 days/within a year. If you're not in collections yet, ask the creditors how much they'll reduce your total interest. Some companies (e.g. Discover used to do this) will even suspend interest entirely while you're in re-payment. Of course, you can't use the credit card during that time, but you're saving money and salvaging your credit. Good luck! ----------------------- There are several benefits to credit card consolidation: - Convenience (only one or two payments) - Easier to manage (less likely to forget a bill!) - Possibly a lower combined interest rate Generally, when companies help you by consolidating your credit cards, they contact the credit card companies on your behalf and try to negotiate a lower interest rate (you can do this on your own, by the way). Then, the companies can take one of several methods for that single consolidated payment. Options include... - Financing your debt themselves and then THEY pay your creditors - Helping you find a financier to consolidate your debt - Having you roll all of your debt under one of your existing accounts and pay off the others As such, credit card consolidation does not affect your credit rating. In fact, the results of consolidation are often positive simply because it's easier to manage and you may pay less interest. All this being said, I've never used a consolidation agency because I never wanted to pay the fees. Instead, I contacted my creditors myself and asked for the best possible interest rate they could give me, and asked what kind of arrangements I could make to manage debt. In general, they all worked with me. By the way, here's one thing to consider when paying off your debt: Bad credit falls off your credit report 7-10 years after your last transaction. So, if you have a liability that is 6 years and 10 months old, carefully consider whether you pay it off or not. If you touch that account at all, even if it's to pay it off, suddenly that 7-year period is renewed. So, the choice you have to make is: Do you want something that was bad and is now paid on your credit report for another 7 years, or do you just want it gone entirely? There are some ethical questions there, too (e.g. if the debt was yours and you were above 18 at the time, you should pay the debt to be ethical). These are questions that only you can answer. But, when working with a consolidation company, make sure they only consolidate the accounts you want them to touch. Good luck.

Q: How much does it cost generally to pay a debt consolidation company?
I was wondering how much does it cost to pay a debt consolidation company to help you, because I want to know if it's worth it. I'm in so much debt making barely and I don't know what else to do. On payday I usually just have 100-200 dollars to myself because the rest goes to my bills.

A: Credit Counselors charge between $10-$50/month and get your interest rates cut a bit. Debt Settlement companies usually charge about 15% of what you owe over the term of your program. A mortgage debt consolidation will cost you from 1% to 4% of the amount you refinance. What you should really look at is what is the total cost to get debt free, how long the program will take, and how low each can get your monthly payment. Try to get a free consultation from someone, this page had a good review of your options and considerations so you choose the right path for your situation: http://www.bills.com/blog/consolidate-debts/

Q: Where can I find reputable debt consolidation programs?
I am wondering where to find a trustworthy list of reputable debt-relief/debt-settlement or consolidation programs. I also need to know where to find a comprehensive list of ALL of my debts (not just the ones appearing on the credit report). Thanks.

A: Please do not consolidate. It is not free, they will lower your payments by increasing the length of time until you are debt free, and you will take a hit on your credit score. There is a better way. A. Have a garage sale and sell anything that you no longer need or want. B.Get a temporary part time job, if you have one, get another. The holidays are coming and there will be plenty of temporary jobs available. It is better to have a no fun year or two than a no fun decade. Here is a plan that can help you. If you work the plan, the plan will work for you: 1. Make a budget. Make the budget a week before you get paid. A budget is not a punishment! It is a tool which will free you from ever having to worry about money again. Put everything in your budget. Especially those annual, biannual, or quarterly bills like car registration, insurance, etc. Give every dollar you are going to bring home the name of where it is going. Add an "emergency fund" category to your budget for 25 dollars and save up until you have 1000-1250 dollars. Your emergency fund will help keep you from getting into new debt because of an emergency. If you can, set up a direct transfer to a savings account for your emergency fund. That way it moves automatically and you don't even have to worry about it. You must cut your spending and live on less than you make. 2.First get current on all of you debts and make no more late payments. Stop using your credit cards immediately. Do not take on any more debt. Credit cards are like quicksand only the death is much slower. Make a list of all of your debts in order of highest interest rate to lowest interest. Use cash only for your spending from now on. 3.Pay the minimum due on all of your debts and then put your extra money towards paying off the highest interest one first. After you get that one paid off, you put the money you were paying on debt #1 (the minimum payment and the extra payment) towards debt #2. That will pay debt #2 off faster. When that is paid off, you put all three payments towards card #3 and that one will be paid off pretty quickly. As an example: To start : Debt #1 (highest interest): minimum payment+ extra payment Debt #2 (middle interest): minimum payment Debt #3(lowest interest): minimum payment Debt #1: paid off Debt #2: minimum payment from Debt #1+ Minimum payment from Debt #2 +extra payment Debt #3: minimum payment Debt #1: paid off Debt #2: paid off Debt #3:Mimimum payment from card #1+ minimum payment from Debt #2+ minimum payment from Debt #3+ extra payment. That way, you will get them all paid off, on time, and pay the least interest. It will also help towards rebuilding your credit since you will no longer have any late payments. This works no matter how many different debts you may have. 4. After you get all of your debts paid off, add to your emergency fund until you have 6-12 months of income saved up. Put that emergency fund money into a liquid money market fund or into a Bank of America no-risk CD so that if you need the money you can take it out without penalty. 5a. When you have your emergency fund in place, add a category for "fun" to your budget. Save for a holiday, a vacation, a big screen, or dinners out, whatever goal you want. Remember to enjoy your life. 5b. When you have your emergency fund in place, start saving for your retirement. Join the 401(k) plan at work and contribute the maximum. Your employer probably matches at least part of your contribution so why give up free money? Open a Roth IRA and contribute the maximum on a monthly basis. If you start saving for your retirement now, you will probably retire a millionaire. 5c. When you have your emergency fund in place, start saving for your next car. Only buy cars, or other things that depreciate, with cash. Save up for a nicer car. That way you get the interest instead of paying the interest. You can do it and it isn't as hard as you think. Just follow the plan.

Q: Credit card debt consolidation companies, Anyone know of a good one?
I've become over whelmed with my credit card debt and I'm getting those phone calls because I'm missing payments and such. Anyway I'm looking for a credit card debt consolidation company that doesn't screw people over, anyone know of any from experience or just know a good one?

A: Try http://personal-financial-help.solutionsarticles.com they aren't that bad (7% for me) and definitely quick. The Idea is to find a loan at less interests than you pay now, and fixed interests. Credit cards can have high interests so it shouldn't be difficult to beat them, depending on your credit score. Whoever you go with, you should always check if they belong to the American Bankers Association at http://buyersguide.aba.com or at least the https://www.bbb.org the above people do.

Q: What is a good, reputable debt consolidation company?
I am thinking about doing debt consolidation, but am confused by all the different companies out there. I have heard that there are a lot of shady companies. Does anyone have some helpful advice. My debt is not a huge amount ($6000), but I am tired of paying and paying on them and never seeing a difference on the balances.

A: I would suggest not going through a debt consolidation company because there are many bad ones out there. Plus borrowing money to pay off your loans to get one payment is like "Borrowing from Peter to pay Paul" as my grandparents told me once. If you do a search on the internet, many of the loan consolidation companies are listed on Rip Off Reports website. Here is some advice to do this on your own. With only $6,000 in debt, you should be able to do this fairly quick. Others are using the same method with over $100,000 in debt. It works. First thing of course would be to cut up the credit cards and make a commitment to never charge again. Then follow the following plan. Make a list all your debts by amount you owe from smallest to largest. Then begin by paying the "most" amount you can each month to the smallest debt with the idea of paying it off quick. Then, only pay the minimum payment on the larger debts. Continue doing this every month until you have the smallest one paid off. Everytime you pay off a debt, call the company and tell them to close the account ... that you paid off the debt and that you do not want to leave the account open. They will try to talk you into leaving the account open. Don't do this as it is too convenient and you will be tempted and will sink into debt again. You then start paying the most you can on the next smallest debt in line and go on from there until you have each paid off. Every time you get any extra money, whether it be $5, $10 or more, apply it against your debt even if you have already sent in a payment. You can send in payments more than once a month. Don't go out to eat. It's "beans and rice, rice and beans" as Dave Ramsey always says which just means (cheap meals that you can fix at home). LOL Also do things to make money like garage sales, sell on eBay, get a second job, anything to help you get money to apply toward that debt. It's not about obtaining the best credit score, it's about eliminating the debt. You can get more help on how to accomplish this by reading and listening to Dave Ramsey. He has a talk show which you can hear on line through his archives, or live on line, or by radio by entering your zip code and find out what time of day his show airs. Plus there is a lot of reading material on his site to get you started. In addition, he has forums from his site to get help and advice from other people who are in debt. Dave has been there (with debt) and knows what it is like and is now helping people to get out of it. There are people that have followed this method with over $100,000 in debt and have gotten it paid off without going through bankruptcy and without getting some debt help company to do it for them. Dave's website link is below. I would also consider getting his book if you can. I gave mine away a few days ago to someone else on Yahoo Answers who is trying to do the same thing. It is worth the money and not that much, but you can obtain much information just by reading his site, going into his forums (there is a free trial offer) and listening to him on air. I hope this information helps you and you get the relief you need. Best of wishes to you. http://www.daveramsey.com

Q: Can debt consolidation have a negative impact on my credit profile?
How can debt consolidation affect my credit history/profile? How will it affect my credit score now? What if I want to buy a house within the next 2 years? What if I want to buy a car within the next year?

A: Ask lenders for agreement to delete this items from your credit report when paying them. I recommend to get such agreement thru credit repair agency, for example this one - creditreport.fateback.com

Q: What are the advantages and disadvantages of having one of those debt consolidation companies help you?
If anyone has any experiences with good or bad in dealing with a debt consolidation company let me know. Would it be a good idea to have one help me if I have about 4,000 dollars in debt?

A: They usually wont do much for you unless you have $10,000 in debt. They essentially call up all your creditors and tell them that you will probably go into bankrupcy and not pay them unless you can work something out. They then negotiate a reduction in your interest rate, a reduction in your debt, and a new lower payment. That is the good part. The bad part is that the lender is then taking a loss after lending you money. Like the friend that always mooches and doen't pay their share, it makes other lenders less likely to lend to you. This will lower your credit score for a while and the credit negotiation will be noted on your credit report. Your $4,000 may be uncomfortable, but it is definately manageable. Do what you can to work this out without going through the counseling. Try getting a second card and transferring the balance - thry will often give you a low transfer rate for a few months. This will give you a chance to get ahead in your payments (keep paying as much as you can even though the minimum payment is less). Remember, a good reputation is invaluable. You need to protect it and build it up. Just because you can borrow money doesn't mean you should.

Q: what is the best debt consolidation company?
I am looking for the best debt consolidation company to help get me out of the mess I am in. Suggestions?

A: They are ALL SCAMS. Don't get ripped off. Go see a local non-profit debt counselor. They will elp you with a budget and help you work with the creditors. No fast easy fixed.

Q: What is a reputable debt consolidation company?
I fell behind on my credit cards when I had an emergency medical expense. Even though I have a steady job and income, they've raised the payments and dropped the limits so there's no chance I'll catch up. I want to do debt consolidation but most companies Google brings me are a scam. I know it ruins your credit, but 8 90+ past due accounts does that too. I've been unable to work out plans with them or find a second job. What is a reputable company?

A: For my debt issues I would go here: http://www.direct.gov.uk They are extremely helpful and are a mine of Free relevant information about debt consolidation. Another source of Free info http://debt-help-debt.blogspot.com/

Q: What exactly happens to your credit if you do debt consolidation?
I have $7,000 in debt and I have heard about debt consolidation. Does this negatively affect your credit rating? Do you get to choose how much you pay monthly or is there a set amount they make you pay? I live in Canada, if that matters.

A: I went online to look up your question, and here's what I found....I hope that it helps you out....Best of luck to you!!

Q: interested in debt consolidation but dont know where to start?
i am interested in having my monthly credit card payments put into one payment per month. i was very close to trying this but backed out at the last minute out of fear of being screwed over by a debt consolidation company. can someone explain how these companies work? has anyone ever used one? is it helpful? do u pay the debt consolidation company a seperate fee? or do they include that within ur consolidated payment?

A: My husband and I are having money issues and are in way over our head in cc bills thanks to a wedding and buying a house.. We looked into debt consolidation but found out that you have to pay them a lot of money to consolidate your debt, and its worse on your credit than filing bankruptcy. Besides it always on your record where if you file Bankrupt you only have to have it on your credit for 7 years.. My SIL filed bankruptcy about 4 years ago and bought a house last year and has no problems getting loans because she found simple ways to get her credit back up after filing bankruptcy.. Not rooting for bankruptcy here but don't be fooled by the way it sounds.. Debt consolidation companies literally screw you financially (which is why you are there in the first place so it doesn't help but only make things worse) and its worse on your overall credit. best of luck!

Q: Is it recommended to use debt consolidation for credit card debt?
I am approximately $25k in debt, should I use a debt consolidation agency?

A: well, you got SOME replies but here's some great reading, might take you a while though: http://credit-cards.ebookorama.com http://finance.ebookorama.com http://credit.ebookorama.com http://credit-repair.ebookorama.com if you get any luck please don't forget about me lol, hope it helped you!

Q: what is the best debt consolidation company out there today?
I have over 10,000 dollars worth of credit card debt. should I consider consolidating? I can afford the payments no problem, but in the long run, the interest may be more than what I could have paid if I was in a debt consolidation program. Does that make sense to you? Thank you for your time.

A: Please do not consolidate. It is not free, they will lower your payments by increasing the length of time until you are debt free, and you will take a hit on your credit score. There is a better way. A. Have a garage sale and sell anything that you no longer need or want. B.Get a temporary part time job, if you have one, get another. The holidays are coming and there will be plenty of temporary jobs available. It is better to have a no fun year or two than a no fun decade. Here is a plan that can help you. If you work the plan, the plan will work for you: 1. Make a budget. Make the budget a week before you get paid. A budget is not a punishment! It is a tool which will free you from ever having to worry about money again. Put everything in your budget. Especially those annual, biannual, or quarterly bills like car registration, insurance, etc. Give every dollar you are going to bring home the name of where it is going. Add an "emergency fund" category to your budget for 25 dollars and save up until you have 1000-1250 dollars. Your emergency fund will help keep you from getting into new debt because of an emergency. If you can, set up a direct transfer to a savings account for your emergency fund. That way it moves automatically and you don't even have to worry about it. You must cut your spending and live on less than you make. 2.First get current on all of you debts and make no more late payments. Stop using your credit cards immediately. Do not take on any more debt. Credit cards are like quicksand only the death is much slower. Make a list of all of your debts in order of highest interest rate to lowest interest. Use cash only for your spending from now on. 3.Pay the minimum due on all of your debts and then put your extra money towards paying off the highest interest one first. After you get that one paid off, you put the money you were paying on debt #1 (the minimum payment and the extra payment) towards debt #2. That will pay debt #2 off faster. When that is paid off, you put all three payments towards card #3 and that one will be paid off pretty quickly. As an example: To start : Debt #1 (highest interest): minimum payment+ extra payment Debt #2 (middle interest): minimum payment Debt #3(lowest interest): minimum payment Debt #1: paid off Debt #2: minimum payment from Debt #1+ Minimum payment from Debt #2 +extra payment Debt #3: minimum payment Debt #1: paid off Debt #2: paid off Debt #3:Mimimum payment from card #1+ minimum payment from Debt #2+ minimum payment from Debt #3+ extra payment. That way, you will get them all paid off, on time, and pay the least interest. It will also help towards rebuilding your credit since you will no longer have any late payments. This works no matter how many different debts you may have. 4. After you get all of your debts paid off, add to your emergency fund until you have 6-12 months of income saved up. Put that emergency fund money into a liquid money market fund or into a Bank of America no-risk CD so that if you need the money you can take it out without penalty. 5a. When you have your emergency fund in place, add a category for "fun" to your budget. Save for a holiday, a vacation, a big screen, or dinners out, whatever goal you want. Remember to enjoy your life. 5b. When you have your emergency fund in place, start saving for your retirement. Join the 401(k) plan at work and contribute the maximum. Your employer probably matches at least part of your contribution so why give up free money? Open a Roth IRA and contribute the maximum on a monthly basis. If you start saving for your retirement now, you will probably retire a millionaire. 5c. When you have your emergency fund in place, start saving for your next car. Only buy cars, or other things that depreciate, with cash. Save up for a nicer car. That way you get the interest instead of paying the interest. You can do it and it isn't as hard as you think. Just follow the plan.