Anyone use one of those debt lawyers or debt consolidation companies?

[lokiju]

Anyone know of one of those kind of companies that actually help and aren't gonna end up making things worse for me?

My credit is so f'ed that I'm at a point where I need to work on a long term plan of fixing it so if that means making it a little worse in the mean time then I don't think It'll matter a whole lot at this point.

Any one have any company suggestions?

 

[CrackRabbit]

Most of the debt consolidation companies are worthless.
I had a friend sign up for one, basically they were not taking care of their end of the bargain. He would pay them, they said they were distributing the money where it needs to go, starts getting calls from angry creditors wondering why they were not getting their payments from debt consolidation company.

 

[EagleKeeper]

Some work, some do not.

The non-profits are usually best.

I had a daughter use CCC (Comercial Credit Counselors) that allowed her to straighten out the mess she and her ex created over a 3 year time frame.

Use the BBB to determine the good ones in your area.

 

[jme5343]

I used a company called Genus, which is now myafs, back in the day. They were a big help on numerous fronts. They stopped collections, they reduced my interest rate on two accounts, and they kept record of all payments.

The last one was the biggest help to me in the end. I was able to pay off all my debts in two years with a direct debit program. Well, about 6 months later, fingerhut started claiming I hadn't paid. I was no longer a Genus client, but I called them. They went to bat for me. The faxed records of all payment to fingerhut, dates payment were made, company contacts, etc. Without that record, I'd probably have been saddled with the bill once again.

It's a non profit. For me, I had 5 outstanding accounts. For each account, I elected to donate $3 monthly to them for their help. So, it was basically $15 a month for me. They debited the funds from my account, then paid all the creditors for me. It was well worth it at the time, as I was traveling state to state for my job and having trouble keeping all my stuff straight. I was also only 22, which didn't help.. But the fee was optional. When one acount was paid, they rolled that money over to the account with the highest interest, allowing it to be paid off that much sooner.

It's worth a shot. I'm probably in the 790 -800 range now, I wouldn't even be close to that without Genus.

 

[SoulAssassin]

First things first, have you called all your cc companies and tried to get lower rates yourself? Many of these companies list themselves as non-profit but they have another company (coincidentally owned by the same people) who supposedly processes the payments for them for a fee so be careful of that scam.

Go here: http://www.infinitecredit.com/

 

[Kadarin]

At one point I had $35k in CC debt, and was able to pay it off entirely without using one of those organizations. My suggestion would be to research their terms and conditions, and what services they actually do. Then make a decision as to whether it's worth it.

 

[chambersc]

Originally posted by: Astaroth33
At one point I had $35k in CC debt, and was able to pay it off entirely without using one of those organizations. My suggestion would be to research their terms and conditions, and what services they actually do. Then make a decision as to whether it's worth it.

Did you come into an incredible amount of cash or did you pay it off over a very long time?

 

[jme5343]

Originally posted by: chambersc

Originally posted by: Astaroth33
At one point I had $35k in CC debt, and was able to pay it off entirely without using one of those organizations. My suggestion would be to research their terms and conditions, and what services they actually do. Then make a decision as to whether it's worth it.

Did you come into an incredible amount of cash or did you pay it off over a very long time?

It's called "Bank Robbery"

 

[chambersc]

Originally posted by: jmebonner

Originally posted by: chambersc

Originally posted by: Astaroth33
At one point I had $35k in CC debt, and was able to pay it off entirely without using one of those organizations. My suggestion would be to research their terms and conditions, and what services they actually do. Then make a decision as to whether it's worth it.

Did you come into an incredible amount of cash or did you pay it off over a very long time?

It's called "Bank Robbery"

It would seem like it. How does one pay off $35k in CC debt is beyond me.

 

[Sphexi]

Originally posted by: jmebonner

Originally posted by: chambersc

Originally posted by: Astaroth33
At one point I had $35k in CC debt, and was able to pay it off entirely without using one of those organizations. My suggestion would be to research their terms and conditions, and what services they actually do. Then make a decision as to whether it's worth it.

Did you come into an incredible amount of cash or did you pay it off over a very long time?

It's called "Male Prostitution"

Fixed

 

[Kadarin]

Originally posted by: Sphexi

Originally posted by: jmebonner

Originally posted by: chambersc

Originally posted by: Astaroth33
At one point I had $35k in CC debt, and was able to pay it off entirely without using one of those organizations. My suggestion would be to research their terms and conditions, and what services they actually do. Then make a decision as to whether it's worth it.

Did you come into an incredible amount of cash or did you pay it off over a very long time?

It's called "Male Prostitution"

Fixed

LMAO! I'm Astaroth33, not Sonz70...

It's actually called "making payments of $1500-2000 per month". If the income isn't there, no amount of "debt consolidation managment" will help.

 

[PokerGuy]

Basically, there is nothing those companies do that you can't do yourself --- and without paying anything. There are lots of scam ones out there, but even beyond those (even the ones that are legit), you can do that yourself.

Basically, make a spreadsheet with every debt you have, credit cards, car loans, mortgage etc, including the interest rate, minimum payment due etc. Then, make a budget for yourself, to figure out how much exactly you have available for repayment each month. Then simply call each CC company, and tell the customer service rep you'd like to talk to someone about setting up a repayment plan. You'll find that they will gladly work with you on setting up a repayment plan instead of having you go into default. If you go into default, and they end up having to sell the debt to a collector, they'll only get back pennies on the dollar. If they work with you, they get the full amount.

Specifically, ask them if they are willing to reduce the interest rate on a fixed amount repayment plan. Do this with each CC company, and start paying back as much as you can. If you have some $$ available in any month, pay it towards the CC's.

Trust me, there is nothing magical that the consolidation companies or credit 'help' companies can do. If you owe the debt, you have to pay it back, and you have to figure out with your budget how best to do that.

Edit: if you need some help figuring some of this stuff out or have specific questions, drop me a PM, I've helped out some folks with these issues before.

 

[lokiju]

Originally posted by: PokerGuy
Basically, there is nothing those companies do that you can't do yourself --- and without paying anything. There are lots of scam ones out there, but even beyond those (even the ones that are legit), you can do that yourself.

Basically, make a spreadsheet with every debt you have, credit cards, car loans, mortgage etc, including the interest rate, minimum payment due etc. Then, make a budget for yourself, to figure out how much exactly you have available for repayment each month. Then simply call each CC company, and tell the customer service rep you'd like to talk to someone about setting up a repayment plan. You'll find that they will gladly work with you on setting up a repayment plan instead of having you go into default. If you go into default, and they end up having to sell the debt to a collector, they'll only get back pennies on the dollar. If they work with you, they get the full amount.

Specifically, ask them if they are willing to reduce the interest rate on a fixed amount repayment plan. Do this with each CC company, and start paying back as much as you can. If you have some $$ available in any month, pay it towards the CC's.

Trust me, there is nothing magical that the consolidation companies or credit 'help' companies can do. If you owe the debt, you have to pay it back, and you have to figure out with your budget how best to do that.

Edit: if you need some help figuring some of this stuff out or have specific questions, drop me a PM, I've helped out some folks with these issues before.

I'm so far under with some of these debts that its not even with the credit card companies anymore and just with collection companies, from what I understand, a lot of these debt consolidation services can get the owed amount and fees reduced in an effort to just recoup something.

 

[Double Trouble]

lokiju, don't be fooled by the sales pitch for these companies. There is basically nothing they can do to reduce the debts and fees etc that you can't do yourself. If you're not comfortable cotacting the collection agencies / CC companies yourself and working out a settlement, then it might make sense to hire one of these, but be careful -- most of them are simply scams. They claim to be nonprofit, but they'll just drive you into a deeper hole than where you already are.

Also, keep in mind that if they 'forgive' a portion of the debt (for example, you owe $4000 and they agree to take $2000 as payment and close the account), you will be taxed on the difference as income. In other words, the IRS is going to say (in the scenario I just described) that you received $2000 in income, and you owe taxes on it.

Collection companies are scum, don't ever agree to *anything* if it's not in writing. Even if it is, make sure you take a good close look at what they are offering.

One example you'll often see is that they offer you a new credit card, with the balance you owed already on the card, so you can pay it off. That basically means by taking the card you are validating the debt, and the statute of limitations clock will start ticking from scratch. Basically, it's usually a bad deal.

edit: Also, you have to find out if the debt has been sold to a collection agency, or if the CC company simply hired a collection agency to collect. If it's the latter, then you can still deal with the CC company and just ignore the collections folks (better). If it's been sold, then you will have to deal with the collection agency directly.

 

[kami333]

Originally posted by: tagej
Collection companies are scum, don't ever agree to *anything* if it's not in writing. Even if it is, make sure you take a good close look at what they are offering.

One example you'll often see is that they offer you a new credit card, with the balance you owed already on the card, so you can pay it off. That basically means by taking the card you are validating the debt, and the statute of limitations clock will start ticking from scratch. Basically, it's usually a bad deal.

edit: Also, you have to find out if the debt has been sold to a collection agency, or if the CC company simply hired a collection agency to collect. If it's the latter, then you can still deal with the CC company and just ignore the collections folks (better). If it's been sold, then you will have to deal with the collection agency directly.

Yup. Get on to creditboards.com, there is some good information on how to handle collections while minimizing their impact on your credit.

 

[lokiju]

Originally posted by: tagej
lokiju, don't be fooled by the sales pitch for these companies. There is basically nothing they can do to reduce the debts and fees etc that you can't do yourself. If you're not comfortable cotacting the collection agencies / CC companies yourself and working out a settlement, then it might make sense to hire one of these, but be careful -- most of them are simply scams. They claim to be nonprofit, but they'll just drive you into a deeper hole than where you already are.

Also, keep in mind that if they 'forgive' a portion of the debt (for example, you owe $4000 and they agree to take $2000 as payment and close the account), you will be taxed on the difference as income. In other words, the IRS is going to say (in the scenario I just described) that you received $2000 in income, and you owe taxes on it.

Collection companies are scum, don't ever agree to *anything* if it's not in writing. Even if it is, make sure you take a good close look at what they are offering.

One example you'll often see is that they offer you a new credit card, with the balance you owed already on the card, so you can pay it off. That basically means by taking the card you are validating the debt, and the statute of limitations clock will start ticking from scratch. Basically, it's usually a bad deal.

edit: Also, you have to find out if the debt has been sold to a collection agency, or if the CC company simply hired a collection agency to collect. If it's the latter, then you can still deal with the CC company and just ignore the collections folks (better). If it's been sold, then you will have to deal with the collection agency directly.

Whoa, that tax bit is new to me and very good to know.

Very good information!

:beer:

 

[Aikouka]

My mom went through a debt lawyer I believe... they actually made things worse, because they told my mom to not pay a payment once so they'd do something differently. Yeah, like demand an extra 50% and all paid in full.

As for the credit counselors, I don't think they helped either... she just settled them all and is now fine with a credit rating that's rising up quite steadily and already in the "Good" section.

 

[EagleKeeper]

Tax hit will usually kick in after 20-25% on the forgiveness.

That is the point when the debt forgiveness is reported to the IRS as misc income.

 

[lokiju]

Originally posted by: EagleKeeper
Tax hit will usually kick in after 20-25% on the forgiveness.

That is the point when the debt forgiveness is reported to the IRS as misc income.

Well thats good to know.

Looks like I'll have to start calling up the companies and see what they're willing to work out.

:crosses fingers;

 

[Double Trouble]

Originally posted by: EagleKeeper
Tax hit will usually kick in after 20-25% on the forgiveness.

That is the point when the debt forgiveness is reported to the IRS as misc income.

Thanks for the info. See, we can all learn something here

lokiju, your best bet is always to work with the original creditor, not the leeches that come into play afterwards. Contact the CC company, find out if they've charged off/sold the debt. If not, just tell them you'd like to work out a payment plan. If they won't budge at all, you can always mentiont that you're considering bancruptcy, in which case they will get absolutely nothing. They usually will be willing to work out some plan.