care one debt settlement

Discussion in 'Budget Board' started by disney_girl125, Sep 15, 2012.

  1. disney_girl125

    disney_girl125 Mouseketeer

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    Has anyone done it? I have so many bills a month, credit cards, loans, etc. I have paid everything on time and have never missed a payment, but it's hard to stay afloat. I called care one and they said i'd be better off with a debt settlement and i'd be paying a quarter of what i'd be paying now. It sounds like a huge relief for me. But, i'm worried about my credit. It's not that great now, but it's not bad. I know in the next couple of years i'm going to have to get another auto loan. I would be keeping 3 credit cards. Macys, tires plus, and capital one. So, maybe having those will help me keep my credit intact? Does anyone have any advice? I owe over 10,000 and doing a debt consolidation really wouldn't lower things. That's why they suggested a settlement.
     
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  3. clm10308

    clm10308 DIS Veteran

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    I have never used a debt settlement company personally, but I know people who have and I did some research as I was considering it.

    As I understand the program, they work with your creditors to reduce the amount you pay. It will impact your credit rating in a negative way. For us, that is not a problem because we do not plan on needed to purchase a home, or car on credit, and we are closing credit cards as we pay them off.

    Another thing to know is that you are not allowed to accrue any new debt while you are in the program. That means no charging new things to credit cards, no financing a car or anything. If you violate this part of you agreement, the debt company can drop you and you are stuck trying to work with the credit companies on your own.

    It doesn't really sound like you are ready for this type of program yet, but maybe...
     
  4. honeylove

    honeylove Mouseketeer

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    If you are looking at applying for an auto loan soon, I would highly suggest against doing it, as this debt consolidation would negatively affect your credit.

    I know someone that was put into this situation before and CareOne was nice in the beginning and then got really aggressive when they declined. I highly suggest looking into other financial boards. People there give really good advice about how to go about paying off debt and such. Start by contacting your creditors, asking how and if they can help you out.

    Good luck!
     
  5. yupikgal

    yupikgal DIS Veteran

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    I wouldn't do it. I almost did a similar thing previously, but decided to cancel the contract. They aren't doing it for free. You will have to pay a fee. Honeylove is right, you won't be able to get a car loan, and unless you had the money to pay for one outright, which it doesn't sound like you do, I would avoid it like the plague. You can do it on your own, just tighten your belt, I know it's not easy, but it can be done!

    1) cancel cable, high cost cell plans,
    2) eat at home more, less or no eating out
    3) sell things that you don't use and are still in good shape or new
    4) Keep your existing car in good shape by tuneups, etc. Even if it has high miles, keep driving it as long as you can! Newer cars can go for a long time, we have two with over
    100k miles each!
    5) Not sure if you already work full time, but maybe get a weekend or evening job, even for just a few days a week to help pay down bills faster
    6) Buy store brands, not higher priced national brands
    7) Avoid going to movies, going shopping (unless absolutely necessary) shop @ thrift stores or garage sales for things
    8) put any future refunds (such as tax refunds) towards debt
    9) Call your creditors and see if you can get your rate lowered yourself!
    10) if you own your own home, see about refinancing

    Hope this helps? Good luck! You can do it!! ;)
     
  6. disneychic2

    disneychic2 DIS Veteran

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    This is great advise! I would add one other thing: stop using credit cards NOW. Then begin chipping away at paying off the one you owe the least amount on. Then, take the amount you were paying on that one and add it to the amount you're paying on the next smallest bill you owe. Keep doing this until all CC are paid of. See if your local library has any books by Dave Ramsey and read them. They will help make sense of everything and get you on the right track. Well, I guess that was more than one other thing, but hopefully it will help you. Good luck!!:goodvibes
     
  7. Deb & Bill

    Deb & Bill DVC-Trivia Contest, Apr-2006: Honorable Mention

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    Add to this: Cancel any upcoming Disney trips or other vacations until you can pay off what you owe.
     
  8. TheRustyScupper

    TheRustyScupper Just once, I want to see a liar's pants on fire.

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    1) Debt settlement companies usually don't help much.
    2) They are more for themselves than for you.
    3) HOWEVER, I would recommend Consumers Credit Counseling Service.
    . . . they are local all over the country
    . . . they are non-profit
    . . . THEY DO NOT CHARGE YOU A SERVICE FEE
    4) The fees are paid by the creditor
    . . . CCCS negotiates with the creditor
    . . . the creditor reduces the payment, interest, fees, etc
    . . . the creditor also agrees to pay the percentage service fee
    5) The process is *almost* painless
    . . . make appt at their office
    . . . have a counseling session with them
    . . . make a thorough monthly budget together with CCCS
    . . . they contact creditors
    . . . CCCS and creditor negotiate the monthly payment for each
    . . . you and CCCS agree to the monthly payments by you
    . . . decide upon your weekly/monthly payment contributions
    . . . turn over your credit cards
    . . . sign authorization for your payments to be payroll deducted (painlessly)
    6) These folks are above-board and ethical, plus, free to you.

    NOTE: Many years ago, we volunteered at a local CCCS office for two
    years. It was a great experience to help people out of dire circumstances
    and be on the road to financial stability. (By the way, the payroll deduction
    is done so that you pay each week, instead of letting it go.)
     
  9. Cierese

    Cierese Mouseketeer

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    I 2nd this route!
     
  10. LJSquishy

    LJSquishy DIS Veteran

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    I agree with the above. Absolutely cut back in every way possible.

    In the situation you are in, I'm not sure why you are even considering another auto loan (even 2 years from now, unless you can pay off your other debt before assuming a new loan). Keep repairing the car you have, and if you can't, purchase a car you CAN afford. Maybe it's a $500 car. Maybe it's a $2,000 car. You just have to buy what you can afford and upgrade down the road when you can afford more.

    However you decide to take care of your current debt, close your Macy's account when you can. It doesn't make sense for you to have a department store credit card, especially when you say your debt to income ratio is starting to spin out of control. I would also cancel your Tires Plus card when you can...you don't need new tires often enough to justify having a special card.

    Try to do this on your own if at all possible...you do not want to ruin whatever credit rating you still have. You did say you have never missed a payment, which is great. I bet you can cut back in some areas and make smarter decisions on where your money goes. And, as others said, absolutely NO MORE charging anything. Except for an emergency, if you don't have the cash, you can't have it.
     
  11. POOHsie

    POOHsie DIS Veteran

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    I agree with TheRustyScupper to go through Consumer Credit Counseling Service (CCCS). They are a non-profit, and they are honest people to help you.

    You wrote a few things that are concerning. You planned on getting another car in a few years. You would keep your Macy's card, TiresPlus card and Capital One card. You are doing what many people with a problem do: you recognize you have a problem. You want to change your bad habits. But you don't want to eliminate your bad habits. Drug addicts try to negotiate "cutting back on drugs." Cigarette addicts, alcohol addicts, too. Same for those with debt problems -- "I'll change some but not totally commit." It's not going to work.

    You are at a tipping point and you're going over the edge shortly if you don't give up credit cards to fill in when you don't have enough cash. First thing to do is tear up ALL your cards. ALL YOUR CREDIT CARDS. So then what? Well, if you have to pay cash for expenses and you don't have enough cash, you'll get the answer I got, and so many others got. Eat cheap, live cheap, buy clothes cheap or no new clothes. Keep that car running--no new car. No beauty salons, no spas, no concert tickets. Get a Tracfone. Go to the library to use the internet. Vacation? Go to local parks. Get a supplemental job, or two. Pay cash for everything. I promise you will get used to it. And you will have learned an important lesson: credit issuers (including car loans) will give you more credit than you can afford. They make money on your debt; they don't care about your best financial interests. It's up to you to control how you spend your finite amount of money, and it will feel good when you pay off your cards one-by-one until you're debt-free and living within your means.

    Been there, done that, debt-free, and I have money in a savings account today.
     
  12. littlebit0863

    littlebit0863 Mouseketeer

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    I'm not sure what type of loans you have, but I work for a personal loan company, and we do not work with debt relief companies at all. In fact, the second you bring them up you will be hearing from our company's legal division, calling the loan due. No creditor has to work with you, and many won't. A friend of mine did the "pay less interest" thing, she had 17 credit cards. She paid a hefty down payment, only to find that just 3 of the card holders will work with her. Two years later she was approved for a mortgage, with a 40% dp and hefty interest rate. :scared1: I would just work on not creating any more debt, no more loan refinancing, no more charging things, and just try to dig yourself out.
     
  13. NYCDiane

    NYCDiane DIS Veteran

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    Keep in mind, also, that if you do debt settlement, you may have tax consequences at the end of the year. I believe that if the company "forgives" $600 or more, you have to pay taxes on that as "income".
     
  14. Woth2982

    Woth2982 DIS Veteran

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    THIS is exactly what I did. I am very good with money NOW, but when I was in college I was quite the spender. I did look into debt settlement but it looks SO BAD on your credit report. Shows future creditors you may not be good to pay your obligations to them. I stopped charging, and started paying. I told my friends the truth too, I was in debt, and I am trying to get out, so I won't be going out for a while. I still have several credit cards, one is Discover Card which gives cash back. I always sign up for their promotions. Like this month they have 5% cash back on gas. So I use it every single time I need to fill up, then I use the cash back option to pay the bill (you can do this when it reaches $50). It is possible to get out of debt yourself, just takes time and determination.

    Also make sure you start a savings account! I always put $200 per pay check into my savings account, but it started with $25. I now have enough money for a down payment on a condo, which is exactly what I will be using the money for! Good luck and feel free to ask any questions! I have helped a few friends with budgets and financial plans as well!
     
  15. Woth2982

    Woth2982 DIS Veteran

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    THIS is exactly what I did. I am very good with money NOW, but when I was in college I was quite the spender. I did look into debt settlement but it looks SO BAD on your credit report. Shows future creditors you may not be good to pay your obligations to them. I stopped charging, and started paying. I told my friends the truth too, I was in debt, and I am trying to get out, so I won't be going out for a while. I still have several credit cards, one is Discover Card which gives cash back. I always sign up for their promotions. Like this month they have 5% cash back on gas. So I use it every single time I need to fill up, then I use the cash back option to pay the bill (you can do this when it reaches $50). It is possible to get out of debt yourself, just takes time and determination.

    Also make sure you start a savings account! I always put $200 per pay check into my savings account, but it started with $25. I now have enough money for a down payment on a condo, which is exactly what I will be using the money for! Good luck and feel free to ask any questions! I have helped a few friends with budgets and financial plans as well!
     
  16. a1tinkfans

    a1tinkfans Spreading Some Pixie Dust Today!

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    I just want to wish you luck. Lots of good advice previously given......
     
  17. disney1990

    disney1990 <font color=royalblue>Wow, it make my heart skip a

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    Absolutely great advise. But, you mentioned being able to keep 3 credit cards, why? That is what partially caused this problem. Learn to pay with cash and stop the cycle. If you don't have the money to pay for it, then you can't afford it, period.
     
  18. DisMN

    DisMN DIS Veteran

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    OP, I wouldn't recommend debt settlement, especially if you are thinking about a new car in the future. If you went with debt MANAGEMENT, through CareOne, you'll rebuild your credit fairly fast and be able to get a car loan with a decent rate at some time in the future. Settlement, not so easy with that one.
    Calling your creditors yourself generally isn't as easy as people make it sound either and the results are iffy at best. Creditors really don't like lowering their rates enough to really be much help to you. We found that to be true across the board with our creditors.
    We've been with CareOne for a little over 2 years now and they've been able to get our interest rates lowered quite a bit and that has made us able to continue to pay off our debts (a ton of old business debt). CareOne does the snowball system as well, you just keep paying the same amount each month and when one gets paid that amount then goes towards another of the debts.

    Debt settlement is when you pay only a portion of the debt back to the creditors and that's very nearly bankruptcy, with the trashing of your credit to go along with it. Debt Management is the option where you are paying back in full, and CareOne will work with that program too. Management is much less stressfull IMHO and your credit doesn't take quite as hard a hit for as long.

    I wish you all the best. It's not an easy road but there is help out there. You will have to find ways to live within your means though so hang in there, buckle down and don't be afraid to use a service like CareOne. They've been a lifesaver for us and many others.




    Yep. Settlement can be a rough thing when you look at it from this angle. When we checked into it it was ANY amount forgiven was considered income.
     
  19. AskCareOne

    AskCareOne Earning My Ears

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    Debt Settlement is not for everyone and there are risks involved.

    On average, most creditors will accept 45 - 60% of the original balance over 1 - 6 payments. In some instances they may be willing to accept less if the money is available for quick settlement, or they may extend the terms but ask for a higher amount. The settlement world is very fluid as it changes quickly and often. The amount of time it takes to settle an account may vary based on the balance of the account, the creditor, and how quickly funds are built up in your escrow account. In most cases our clients can expect to receive a settlement in months 6 - 8 if they engaged a creditor with a smaller balance of less than $1,000. Again, settlement takes time and it requires trust from customers in our staff and patience. Suzanne Cramer
    Certified Personal Finance Counselor® for CareOne Debt Relief Services
     
  20. DisMN

    DisMN DIS Veteran

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    Hi Suzanne, I recognize you! LOL
    Yup to everything you wrote which is why I so often discourage people from doing the settlement type programs. The debt management through your company has been an absolute lifesaver for my husband and I. Tough at times because of the amount of debt we have/HAD, but we are seeing progress.

    OP, I hope you find the right program for you. Big debt can be so stressfull, don't I know it!
     

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