Credit Thread: Which company should my bro use for credit counsel?

[Red]

My brother is 23 years old, owes $10k on credit cards and they are all high interest (over 20%). His only option at this point is credit counseling. His payment is going to be roughly $200-$250 a month for 4 years to get out of CC debt. Any recommendations of counseling companies?

 

[IamElectro]

Maybe he should check locally for a finacial advisor. They sit down with you in person and look at everything you have coming in and going out and go from there.

Most of those credit counseling places hurt more than they help. The deals the set up alot of time lock the intrest in at a lower rate but at a cost. When I worked for GE Capital in a credit office I dealt with a few of these firms on occasion and the accounts were posted on credit reports as in default until paid depending on balances this could last months.

 

[StageLeft]

I dealt with a few of these firms on occasion and the accounts were posted on credit reports as in default until paid depending on balances this could last months.

Yuck! Has your brother tried contacting his CC companies and telling them he's borderline bankrupt and that if they don't lower the rate he can't continue to pay?

 

[Mr N8]

http://www.nfcc.org/

This is the one place he needs to go to, the consultation will be free, and they are legit. A lot of credit counselor's are shady and get paid to tell you to go certain routes.

 

[kranky]

$250/month for 4 years is not going to pay off $10K at > 20% interest. More like $300.

 

[Thegonagle]

Originally posted by: MogulMonster
http://www.nfcc.org/

This is the one place he needs to go to, the consultation will be free, and they are legit. A lot of credit counselor's are shady and get paid to tell you to go certain routes.

I second that advice. Be sure that whichever organization you contact is approved by NFCC.

 

[FeathersMcGraw]

Originally posted by: kranky
$250/month for 4 years is not going to pay off $10K at > 20% interest. More like $300.

Depends if the agency can negotiate some of the debt as a writeoff by the creditor. I've heard that some of them do this and the creditors agree if they think part of a payment is better than none. Then again, some of these agencies just have their clients file for bankruptcy.

 

[Zombie]

how about getting a personal bank loan at a lower interest rate and paying of this credit card with it?

 

[Nyical]

My wife and me used Genus Credit Managment and it didnt hurt our credit at all, in fact it inproved our credit rating.

 

[Vic]

Originally posted by: kranky
$250/month for 4 years is not going to pay off $10K at > 20% interest. More like $300.

$304.30 exactly assuming 48 months at exactly 20% interest. Total of payments would be $14,606.40 (or $4,606.40 in interest).

Even assuming 0% interest (the best he could possibly hope for), the monthly payments would be $208.33 in order to pay off the debts in 48 months.
Going through a credit counseling service (which I'm not a big fan of but they are usually slightly better than bankruptcy), he will pay additional fees and his credit will likely be trashed. His best bet would be to contact the creditors directly and try to negotiate lower interest rates.
Make sure that he does not make the minimum payments! If they total less than $167 (once again assuming exactly 20% interest), then they are negatively amortized, meaning the payment is not enough to pay down the accruing interest and his balances will go up and he will never pay off the debts.

 

[Carbo]

Send me your bro's social security number, his birthdate, and his photo. I'll take care of things.

 

[Double Trouble]

Be careful selecting credit council companies, they can leave you in a world of hurt with nothing but more bills and bad credit to show for it. Keep in mind that you can do everything they do yourself -- it just takes some time and some reading.

Basically, most creditors are very willing to work with you if you contact them and say you're having some difficulty and would like to work out a payment schedule. Heck, they'll often give you a break on interest rates as well. The worst thing to do is just to let things get bigger and more out of control without taking action. If you do that, at some point you'll have to file for chapter 7 or 13, and that ain't pretty.

 

[The Stigenator]

Try Consumer Credit Counselling Service.. they are NFCC verfied.