Debt reduction question

[TEK224]

I'll be the first to admit I haven't been the most financially responsible person. I have a lot of "stupid" (cc) debt. I am working to pay it off, but it is slow going. I'm a one income household with no kids. I'm basically living pay to pay. All bills (mortgage, utilities and cc's) are current, but once they're paid for the month, there's not much extra.

I get these letters in the mail all the time about reducing my cc debt up to 50%. I avoid them as I know many are scams and others require a payment to the organization for negotiating with the cc companies. With a reduced settlement, in all likelihood my credit score would take a hit.

I'm also not looking to get out of paying the bills. I made them, I'll pay them. But it would be nice to get the interest rates laower, if possible.

So here's my question. I got another letter in the mail today, but it's worded a bit differently. Here's what it says:
"We want to congratulate you on being selected to participate in a Nationally Sanctioned Debt Reduction Initiative. This program allows select individuals to reduce their unsecured credit card rates to as low as 0-9% APR."
It also states that US Lending Institutions are allowing people to participate in a Non-Profit 501c-3 creditor sponsored program and I was selected because of my good payment history. This program is backed by every major credit card provider and is not affiliated with debt settlement and is specifically designed to keep your credit score in excellent standing
There is no cost te enroll in this service.
Even the fine print states that this program is not associated with bankruptcy, debt consolidation loan or debt settlement.

Has anyone seen anything like this or heard of it? Is it worth calling the number or do you think it still could be a scam? This is the first time I ever got one that wasn't for debt consolidation or settlement.
Any advice would be appreciated.

 

[robinb]

I'm sorry, it still seems like a scam to me .

 

[TEK224]

That's what has me leery, too. I checked at BBBonline and the organization (US Council for Consumer Debt Relief) is not BBB accredited. There are also no complaints lodged against them in the past 12 months, according to the site.

 

[DisMN]

I would go with a place that others have used before, not some solicitation I got in the mail. That's just too iffy I would think.

Search some of my posts about debt and you'll read how much success my husband and I have had so far with a company called CareOne. They are not a scam and while they offer debt settlement, which means you don't pay your whole debt and also means near bankruptcy in stress and credit rating.

They also offer debt management which is what we're doing. In debt management you are paying back everything you created BUT the CareOne team deals with the creditors, getting your interest rates lowered so you can actually see your debt decrease.

We were in a very very bad financial place and Lutheran social services credit counselling services were recommending we go bankrupt but we wanted desperately not to do that. When I found CareOne it was a real blessing and they were able to work quickly with us to get us on a program. Credit Counselling services were, IF they worked with us, going to work much more slowly.

I highly recommend CareOne. They've saved our lives. There are months we feel absolutely broke as more than half our income goes to the debt but it's less than it was before we started the program!
As it is the debt is starting to snowball, if you're familiar with that term.
3 years ago my husband was NOT going to be able to retire. Period.
Now.............he's set a retirement goal of 4ish years, maybe slightly less.

p.s. you DO have to stay involved and track your debt, make sure numbers are accurate, stuff like that. It's not giving CareOne ALL the power......you will want to know where you stand month to month.

I hope I didn't overwhelm you with info.
Best of luck you you!

 

[chris31997]

I would say you could do it yourself. It would take you deciding that you were done living pay check to pay check and maybe finding someone to be accountable to.

I would list all bills smallest to largest and tackle the smallest first. Working your way up to the largest. Some would say to work on the ones with the interest rate high to low. But I go with the Ramsey Plan and go amount smallest to largest. I would also do a written budget, monthly.

 

[cornflake]

I'll be the first to admit I haven't been the most financially responsible person. I have a lot of "stupid" (cc) debt. I am working to pay it off, but it is slow going. I'm a one income household with no kids. I'm basically living pay to pay. All bills (mortgage, utilities and cc's) are current, but once they're paid for the month, there's not much extra.

I get these letters in the mail all the time about reducing my cc debt up to 50%. I avoid them as I know many are scams and others require a payment to the organization for negotiating with the cc companies. With a reduced settlement, in all likelihood my credit score would take a hit.

I'm also not looking to get out of paying the bills. I made them, I'll pay them. But it would be nice to get the interest rates laower, if possible.

So here's my question. I got another letter in the mail today, but it's worded a bit differently. Here's what it says:
"We want to congratulate you on being selected to participate in a Nationally Sanctioned Debt Reduction Initiative. This program allows select individuals to reduce their unsecured credit card rates to as low as 0-9% APR."
It also states that US Lending Institutions are allowing people to participate in a Non-Profit 501c-3 creditor sponsored program and I was selected because of my good payment history. This program is backed by every major credit card provider and is not affiliated with debt settlement and is specifically designed to keep your credit score in excellent standing
There is no cost te enroll in this service.
Even the fine print states that this program is not associated with bankruptcy, debt consolidation loan or debt settlement.

Has anyone seen anything like this or heard of it? Is it worth calling the number or do you think it still could be a scam? This is the first time I ever got one that wasn't for debt consolidation or settlement.
Any advice would be appreciated.

That's a scam.

Know how to tell? Did you APPLY to the program? No? Then how and where did they "select" you from?

They selected you from the phone book because you have an address. I know people get letters about how they've been specially selected to save on car insurance because of their excellent history - except they've never held a license.

Also "nationally sanctioned" doesn't mean anything. Sure, lending institutions allow people to participate in creditor-sponsored programs - that a. doesn't mean this is one, b. has nothing to do with anything.

There's no cost to enroll. Bet there's a cost to other things.

If you want a lower interest rate, have you tried calling and asking for one? Card companies will often lower a rate for the asking - or you can try to negotiate to close the card, they lower the rate and you keep paying until it's paid off.

 

[Jenny3]

I would not respond to an offer like that; too risky.

If you're looking to condense your debt, try talking to your bank. I did this about 10 years ago - took out a loan to pay off all the cc debt at a much lower interest rate. The minimum payment is automatically deducted from my account each month and I throw extra at it when I can. See if something like this is an option for you.

 

[Happyjen27]

It's a scam. Get a Dave Ramsey book out of the library and get ready to change your life. If you can keep current with your bills at this time, you're in a great position to conquer this and make choices that will eliminate this debt, build a savings and have some wealth.

 

[RitaE]

The Holiday season is approaching and several major retailers have announced they will be hiring more part-time and temporary help this year.

Is it possible to pick up a second job for a couple of months and do some serious damage toward paying those bills down? I know Target last year offered one of my sons a very early morning job (like 4am to 6:30am) unloading their trucks.

 

[TEK224]

Thanks for the replies. I had a feeling it wasn't legit, just wanted to make sure I wasn't being too cynical.
I do have a part-time job to bring in extra money. I'm also getting a raise at work in teh next month so I'm planning to put half of that to bills and the other half in the emergency fund (which is in its own emergency state).
I'll try calling calling the cc companies to see if I can get a lower rate. I just hate talking to them.

 

[BernardandMissBianca]

As long as you have been current on your credit card bills some companies will negotiate a lower interest rate. We did it with several of our cards and got them paid off a lot quicker.

Then I would get a notebook and list the credit cards in order of balance, making note of the interest rate and the monthly interest charges. Start paying a little more on the lowest balance card first. Once that bill is paid off, then snow ball it into the next one.
If you have 2 cards with the same balance but one has a higher interest rate, pay that one off first.

Also look and see where you can cut other costs. We cut cable last week, switching to just internet and phone and we are saving $145 a month. My BFF is downgrading her cable to basic and dropping the landline and she's saving $40 a month.

 

[Buzzsgramma]

'Total Money Makeover'.....Dave Ramsey...borrow from the library...or buy at a thrift store....or Amazon its that easy...

 

[ZehnJahren]

I'm a one-income household with no kids too; I know it can be daunting.

I don't make bad money, but I DO have a crippling student loan that eats up a ton of cash. That being said, I have no credit card debt, a healthy emergency savings, and take regular vacations.

I was in a bad place too a couple of years ago. Since there's really no easy way out of debt once you're mired, here's my honest suggestion before you go a step further: pick a night this week, sit down with your bank accounts, and figure out how much you have and what you spend. Down to the penny. You know your rent costs, your phone costs, but what about gas for your car? How much did you spend in coffee or fast food? What about spending on movies, or going out to dinner?

I found a lot of money when I did that; the money's been reallocated to places that matter (like Disney trip funds and early payment of loans ), but in your case something as simple as pledging "no fast food" this month (for example) could be an extra $50 or more towards your highest-interest credit card. Plus, you know how much you should have extra, and it helps keep you from frittering it away. I manage to save for an emergency fund and a "fun fund" plus buy stocks every payday, and still have extra for myself and extra to pay any excess debts that come through.

Once you know exactly what you're spending, get a Dave Ramsey book, or something from Suze Orman. I love both of them, and watch Suze's show on CNBC regularly! But you can't get anywhere until you know where your money's going - every cent.

 

[RCBA]

I agree with the others who have said to toss that offer. I would suggest looking at YNAB - You Need a Budget, it is an excellent resource and offers a 34 day trial. I make much smarter spending decisions using YNAB.

 

[Planogirl]

Back when we got into trouble we used Consolidated Credit. They did charge a monthly fee but they negotiated low rates for us and we put those debt demons to rest.

This type of thing is just one option. I would not go with an unknown company.

 

[MrsPete]

Run away. This is a scam. I don't know whether they're going to try to draw you in, then extract fees later, or whether they want your personal information for the purpose of identity theft, but something is wrong with this type of thing.

Only two methods can get you out of debt:
1. Earn more.
2. Spend less.
Or, a combination of the two.

Since they've caught your interest, it sounds like they may have had a good message, one that was tailored to your specific needs -- but that doesn't make them honest.

 

[lesroi]

For anyone who has used a "debt management" program (CareOne, Care Credit, Consumer Credit Counseling, etc...) How did your credit scores fare? I have a customer who has rebuilt his credit but still has some work to do. I think one of these types of programs could help him (but not a settlement program, because I know that will lower the score.)

Let me know, if you have checked your scores before and after the program. I would love to be able to make a recommendation to him.

Thanks!

Tracy

 

[*Seanaci*]

My husband and I just finished our debt settlement program. 2 incomes (although, my income basically covered each debt settlement payment), with one child. We had around $16k worth of CC debt (between the 2 of us). Going the route of debt consolidation was getting us no where quick because hubby's CC company kept sending a letter every month asking for more. So we went with settlement. We worked with a fantastic company. And while looking back it may not have been the most financially sound decision (monthly account maintenance fees to the settlement company), it alleviated a LOT of headaches on our end. And allowed us to budget every month exactly how much money would go toward bills (including the debt settlement payment). It also eliminated the calls from the bill collectors (as well as netted us a $500 lawsuit settlement due to one company harassing me and crossing the line in collection practices). In 4 years, we were done with our debt. Settled all 3 CC's for roughly two-thirds to half their original totals. And now we're putting away that extra money every month toward our Disneyland trip.

The other thing I've heard people be successful with in paying off their CC debt is to start paying off the highest interest rate first. Double your monthly payment (if you can) to them, and pay only minimum on the rest of the cards. Once the highest is paid off, go to the next highest CC and double your monthly payment (should be able to now since you've got the highest paid off, right?) and pay minimum on the rest. Etc etc.

*shrugs* Just my couple of suggestions.

 

[*Seanaci*]

For anyone who has used a "debt management" program (CareOne, Care Credit, Consumer Credit Counseling, etc...) How did your credit scores fare? I have a customer who has rebuilt his credit but still has some work to do. I think one of these types of programs could help him (but not a settlement program, because I know that will lower the score.)

Let me know, if you have checked your scores before and after the program. I would love to be able to make a recommendation to him.

Thanks!

Tracy

To be perfectly honest, my credit score is in the mid 600s now. Granted, my 2 CC's were the first to be settled in the first 2 years of our settlement term program. And now, hubby and I share 1 CC through our credit union (which we try to double or triple the payment every month in order to pay off the balance), and use debit cards and/or cash to pay for things now.

 

[lesroi]

To be perfectly honest, my credit score is in the mid 600s now. Granted, my 2 CC's were the first to be settled in the first 2 years of our settlement term program. And now, hubby and I share 1 CC through our credit union (which we try to double or triple the payment every month in order to pay off the balance), and use debit cards and/or cash to pay for things now.

Thank you, that is very helpful! So you think it went down during your debt management program or do you think it went down during your settlement program? Mid-600 is actually not that bad for just coming out of a settlement program! I think my customer is afraid he will drop down into the 500's if he chooses the settlement program and never be able to buy a house. (620 is about the lowest-qualifying score right now)

Tracy