Debt

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Debt Counseling

Debt Counseling questions and answers

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Q: Debt counseling....?
So I owe about 12000 in debt for credit cards, the accounts are in a debt consolation company which I'm paying about 400 a month to clear the debt, I recently came into $8000.00 and I want close the accounts and pay them all off. IS there a way I can negioate with the creditors to lower my balances since I'm paying it off?

A: Generally if you are current, companies will not settle on the account. You actually have to be behind before they start to make arrangements. Since you are on a program currently you are considered current so they probably will not accept a settlement. However, there is nothing that says you can not ask and see what they will do. If you do get them to settle for less, any amount over $600 you will receive a 1099-C and it is considered unearned income. So if you had a $5,000 debt and they settled for $4,000 you would owe taxes on the $1,000 You might be better off to pay off as many of the accounts you can with the $8,000. Then continue to pay the $400 a month on the remaing cards. Since you have less cards you will be paying more on each one so those amounts will go down faster.

Q: does anyone know of a good non-profit debt counseling service?
I am looking for a way to get a handle on my debt. I have explored a few different options, but my credit is too bad to get any type of loan. I just got a "quote" from a debt relief company to help resolve my issues, but I am a little wary because I have heard a lot of bad things about these companies. Is there anyone who is currently (or in the past) worked successfully with a non-profit debt counseling service? If so, who was it and how was your experience? Any other advice that can be offered is greatly appreciated.

A: CCCS (Consumer Credit Counseling Service) is a non-profit service that is partially funded by the credit card industry. They can put you on a payment plan and reduce or even eliminate interest...They require you to cut up your cards. Note: They DO NOT negotiate settlements...just reduced interest payment. FYI: If you go on their debt program, this will be noted on your credit files and getting any mortgage or car loans will be difficult or impossible while on their program. STAY AWAY form any debt counseling service you see advertised on TV...regardless of how nice their "feel good" ads seem.

Q: can you get debt counseling even if you haven't made card payments in a year?
I have about $8000 in CC debt and I have not been able in to make my payments in over a year due to lack of work and the amount of money I make. Can I still use a credit counseling service or would bankrupcy be the better choice? One of my CC is past collection and being taken to court, would counseling help or is bankrupcy the only choice?

A: You can always look into a Debt Managment Type program. Check with the NFCC, National Foundation of Credit Counseling for an agency that is certified. Additonally you want to make sure they are registered with the BBB and certified for debt managment in your state. The biggest thing is not to be scammed by a debt relief agency/debt consolidation agency who makes promises of settling the debt for you. You may not qualify for a debt management program, but they should all provide an assessment for free to let you know. Basically, to qualify for a debt management, you need to be able to take care of your priorities (housing, essential utilities, food) and also to make a payment to the debt managment program. Most will work with debts even in collections. The problem is how far in the legal process this has taken. You may want to repsond to the summons and complaint and try to set up a payment plan, rather than be granted a default judgement and then be garnished. Once you have a payment arrangment to avoid garnishment, the credit counselor should be able to work with this. Bankruptcy is also an option for people, but with only 8k in debt, I'd hustle and work this out on your own. I hope this helps, I with you the best.

Q: Should I sell my house, declare bankruptcy, or try debt counseling?
I have been having some mental health issues for the last year and have been on short term disability twice. When I return to work in April I'm pretty sure I will be fired. My question is, I bought a house 3yrs ago I owe 104,000 and could probably sell for 140,000. After fees and repairs ect I would make 30,000 which would pay off my other debt. I could also let my other debt get behind and keep up on my house payments then declare banckruptcy. Could I keep my house then? I could probably get a less mentally taxing job that I could pay my mortgage with. Or should I try to go through one of those debt counseling places? I know I am still current with my bills right now, but this keeps me up at night. Oh, and I do have a friend I can stay with for a year if I sell my house.

A: Is this your dream house? If so, then do whatever you have to do to keep yourself from losing or having to sell it. If you can imagine yourself buying another home in the future and being just as happy, then, sell it before it is too late. make some money off of it, pay off your debts. Live with your friend for a while, get your life together and start over. I hope this helps. Good luck.

Q: What is worse for my credit? Debt Counseling or Bankruptcy?
I have finished debt counseling now I am hearing reports that I was probably better off filing for bankruptcy. Any advice?

A: I have done both. I first tried Debt. counceling and consolidation. All it did was make my credit worse. The company only paid the minimum balance if that and creditors still hounded me daily. Once I filed for Bk they were not aloud to contact me again. My credit has actually improved since my bk was final and I was able to purchase a vehicle and a low balance credit card. I am able to purchase a home but at a crazy high interest rate. It has been almost a year and a half since the bk was final and my credit is better than it has been in years. I recommend that if you are choosing one go with the bk, it gives you a fresh start. Just remember that it does stay on your record for eight years and you can not file again for eight years depending on which chapter you file under.

Q: can anyone recommend an HONEST and LEGITIMATE debt counseling company?
I am not looking to consolidate my debt. I am not looking to declare bankruptcy. I am interested in negotiating down my debt however.

A: Dave Ramsey's plan is the only way to go. It's hard work but it does work. Read his books listen to the radioshow/podcast, and take it one day at a time

Q: How do I choose a reliable debt consolidation or debt counseling organizaion?
You hear of so many scams out there. How do you know a reputable organization when you see therm? What are are the best options? A compay with a Christian foundation is preferred. Thanks

A: Go someplace local. Period.

Q: Does anyone know the best company to use for debt counseling and credit card consolidation?
I am looking for a good company to help us negotiate the rates on our cards that we used to start our business. And to hear from personal experience if this is a good way to go.

A: I've recommended the resource listed below to a number of folks, and they've all been pleased with the results. Just make sure that the company you go with is non-profit and doesn't charge you a fee. If they ask for a fee, go elsewhere fast.

Q: How can I find a good legitimate company for debt counseling?
So many turn out to be scams, even some of the major ones that were recommended by the bank and creditors. Im just not sure where to turn to make sure I dont get one of the bad ones.

A: This is a very hard question to answer since there are so many scam companies out there. Your best bet would be to search the Internet for as many companies as you can find, write down the companies name address telephone number etc. Once you have all that information go to the Better Business Bureau and (www.bbb.org) and find out if they are a member and what types of complaints that have already been filed against the company you are checking. Good Luck.

Q: How do credit counseling / debt relief services make money?
I see their ads all the time, offering to slash debt in half and such. While I applaud these services for what they are trying to do, somehow they have to make money, or they couldn't afford to run these ads. Where is the profit coming from. Appreciate the answers in advance, thanks!

A: Usually they are paid by the creditors and debtors both. The creditors are happy to pay a fee to someone who will get their money for them rather than take a loss. The debtors are happy to reduce payments and get a structured program to repay several debts into one managable payment. Everyone is happy with the arrangement. The relief companies are acting a middle men, getting profit they create themselves. The key with this is that anyone can negotiate with creditors. They can do it themselves and avoid the fees, whether hidden or known. If they do this then they can apply the 'fee' money to the payments and possibly end up ahead of the game. Good luck

Q: What is a good debt counseling agency?
I've heard that only the non-profits are worthwhile. Can anyone recommend one from personal experience?

A: Consumer Credit Counseling Service (CCCS) has offices in every state, and they are usually trustworthy. Each regional organization is independent, so it is possible that you might find one that isn't up to par. The one I know about is CCCS of Central Florida, and they have internet and phone counseling available so you wouldn't need to be in the area. If that method is ok for you, I can attest to the honesty of that organization.

Q: Going to debt management/credit counseling. What are the best companies?
I am going to go to a debt management program/credit counseling, it was the best alternative to avoid bankruptcy. What are the best companies that charge a low fee and that can get the best lower monthly payment?

A: consumer credit counseling, www.cccs.org

Q: Has anyone done credit counseling or debt reduction?
I need information on what a good credit counseling or debt reduction company is, and if anyone has personal experience or recommendations.

A: Please do not do "credit counseling", "debt reduction", or "debt consolidation". It will show up on your credit report like a bankruptcy. It is also not free. There is a charge for the company to do it, they will negotiate with the creditors to either take less than you owe (another "ding" on the credit report), or to space the payments out for a longer period (which will cost you more in interest payments), and it will just take longer for you to get out of debt. Here is a plan that will get you out of debt and allow you to never worry about money again. You just have to decide to do it. If you work the plan, the plan will work for you. Get all of the debt paid off as soon as possible, that will enable you to start building real wealth. A. Have a garage sale and sell whatever you don't use or need and use that money to pay down your debt. B. Consider getting a temporary part time job and use all of that salary to pay off your debt quicker. It is better to have a no fun year than a no fun decade. 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. Pay cash for everything. If you can't pay cash or write a check, then you don't need it. Do not use credit cards. Debt (especially credit card debt with it's high interest rates) is like quicksand, if you fall in, you will drown. 2.First get current on all of you debts, if you are not already, and make no more late payments, if you have had any. 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. If it is not on your budget, then you don't need it. If you forget to add a necessity to your budget one month then re do the budget. If you add something in, you will need to take some money out somewhere else. 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: minimum 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? The Human resources Department will have the forms for you to fill out. 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. Start learning about investments. Do some reading. I like "The Lies About Money" by Ric Edelman, "Ready, Set, Retire" by Ray Lucia, and anything by Ed Slott. They are very good books and each has a little different perspective so you can decide your own comfort level with your investment

Q: Who offers free debt counseling that qualifies as a precursor to filing Chapter 7 bankruptcy in California?
Looking for some help here, thanks.

A: http://www.usdoj.gov/ust/eo/bapcpa/ccde/cc_approved.htm gov approved credit counselors

Q: are there any debt consolidations or debt counseling companies for payday advance loans?
i've gotten myself in trouble with these places and can't seem to pay them off. i pay them every week that they are due, and i'm never late and have been with them a very long time. when i'm done paying them i hardly have anything left from my checks to pay anything else. are there any places out there that help with paying these things out. also my credits not that good either because i've tried getting loans to pay them off but always get turned down. does anyone have any advise to help me with this situation.

A: Can you hold on for just a bit longer...you obviously work or payday would not have loaned you money in the first place...why not use your tax refund money to pay this off.