Credit card debt "elimination" services

[chalmers]

I'm not in debt or anything, but I constantly see on tv and hear on the radio commercials about companies who will "lower your huge credit card debt into one easy payment", and "negotiate with creditors to lower your balances"...etc etc etc. How exactly does this work? Wouldn't the credit card companies just be like..."Uh no they owe us the money kthx"

I'm assuming these companies pay off the balance from your credit card company, and thus become your new creditor?

 

[MikeyIs4Dcats]

they negotiate a settlement with the lender either in a lump sum or reduced interest rate, then take your money and pay it for you. in reality the less honest ones may actually pay your bills late and charge you fees.

there are non-profit organizations that will assist you similarly for free.

 

[Locut0s]

Sir just sign here, here, here and here and we'll make all that pain go away.

read, read ,read .....

But this says you will legally own my soul, my wife's soul, my children, my grandchildren, the next five generations. Says here for each payment I fail to make you get a finger. And what's this ass raping service you speak of on the second page...

Jesus just because there is fine print doesn't mean you're supposed to read it. You obviously didn't read it on the original card holders agreement or you wouldn't be here asking for our ummm.. "services". Just sign the sheet and everything will be Okayy...

 

[woodie1]

The ones I know about do not pay anything toward your debt. You send them a payment, they take out their fee and send the balance to your creditors. Think about it, cannot you do that yourself. You will still owe the creditors.

 

[Bignate603]

There was one that basically hired a lawyer to step in and try and sue everybody. They wouldn't win that often but they could get a surprising amount to drop the debt. Eventually, judges just started tossing out all their law suits.

 

[JohnCU]

i called one and they basically close all your CC accounts to the CC companies lower your interest rates... but the first payment goes to them? and then for one month they don't pay it and you are stuck with a late payment on your credit report.

funny thing is, he said i could be debt free in 3 years with his service but by paying about $200 extra a month i can do it myself and not close all my accounts and ruin my credit record.

 

[mrSHEiK124]

I thought they just bought your debts (cash) from teh creditors and make you pay them at a slightly lower interest rate than you would have otherwise.

 

[JohnCU]

Originally posted by: mrSHEiK124
I thought they just bought your debts (cash) from teh creditors and make you pay them at a slightly lower interest rate than you would have otherwise.

yeah i thought so too but they are damn worse than a debt collector. once they get your name/email they won't stop until you demand they stop calling. it's ridiculous.

 

[Xavier434]

It depends on the situation, but I will tell you what happens with a lot of older debt. If you have some older debt that has been passed on from collection agency to collection agency then one way that they can "erase" the debt is by making lots of calls and writing lots of letters demanding proof that you are even responsible for that debt. I know it sounds silly but this is true. The fact is that even though your debt is bought from company to company, not everything that the buyer needs to prove that each detail of debt is yours is passed along with it. Over time, more and more of this needed proof tends to vanish within the system.

In the end, these companies know they can get nailed for not being able to provide sufficient proof which is not missing details that could bring the proof into question. They also know that the cost of defending themselves is not worth it and nor is the cost of putting a lot of people to work in order to fill in those gaps and provide that sufficient proof. That doesn't mean that they do nothing to try and find it, but they will not go beyond a certain point if they believe that the juice is not worth the squeeze. When that happens, the debt that was brought into question magically vanishes along with the history of that debt which was killing your credit history.

 

[sandorski]

A friend went through one last year and it basically worked out that he pays a fraction of what he owed for a set period of time. The service negotiated with all his Creditors. He gets to keep all his stuff(computers mostly), can afford to continue paying his Rent, Eat, and have decent Spending Money. He just can't get a Credit Card or buy anything on Credit.

 

[nerp]

Some debt consolidation services are actually legit and good businesses. They often bundle all your debts into one loan with a fixed payment every month that you can usually budget. It's for people who have multiple cards, loans, and the late fees and interest are piling up to the point where you're paying hundreds every month and the balances aren't going down.

The service will bundle all that into one payment, your accounts are closed and you can just focus on that one payment. I know several people who have done this after getting into trouble with credit cards and it helped them get rid of their debts over several years.

I considered doing it some years ago when I got into a hole but I just borrowed a few thousand from my folks, paid the cards off and then just worked out a monthly repayment plan to mom and dad. Same thing but kept it in the family, basically.

Now I just never put more on my cards than I have in the bank. If I put 5,000 on my card, I make sure I have 5,000 in my checking account to pay it off in full in case I have to.