Debt solution firms

[jmartinez1895]

Hi all, so sorry if this has already been posted before, but I could not find it. A friend of mine was asking about those companies that offer debt solutions. I do not know much about them so I thought some of you might be able to help. She has 30 thousand dollars in credit card debt . She has no trouble making the minimum payment and sometimes makes more, but she has just now decided that she would love to be debt free and spend her money on other things that interest. From what I understand though, she is concerned about what happens after you use one of these companies. Do your credit card issuers allow you to ever use your card again. She has one card that she uses to get rewards and has a lot of points on it. She would like to continue to use this card. Any input or advice would be great. Thanks for your time and help.

 

[minnie1928]

The only reputable place is Consumer Credit Counseling. They will most likely require her to stop using all her credit cards. If she has that much debt, and based on the comments you posted, it sounds like she needs more help than they can offer...she needs a mindset change. Offer to go to a Dave Ramsey Financial Peace University class with her. That might help her see the error of her ways and inspire her to make the necessary changes.

 

[vicki_c]

Here's a link to an article in the Washington Post from just a few days ago. (You have to register to read WP articles, I think - but it's free).

http://www.washingtonpost.com/wp-dyn/content/article/2010/03/26/AR2010032605632.html

 

[jmartinez1895]

Thanks guys. I loaned her my Dave Ramsey book, but who knows if it has been opened. I'll search and see if any churches are doing any of the classes, thats a good idea.

 

[taylor3297]

Consumer Credit Counseling is a great organization. They will ask the person to stop using their credit cards. If the person has a lot of rewards on a card, then they need to use them now.

 

[PrincessBelle09]

As soon as I read your post I thought, "Send her to Dave!" You're a good friend to lend her your book. Talk to her about it and see that she is reading it.

 

[PrincessBelle09]

Sorry for the double post!

 

[Duckyiam71]

Send her to Dave! I second that. I am in program now run by Consumer Credit Counseling. It has helped me pay $40k in debt. I have been in the program for 3 years and I am a recovering shopaholic. About 6 weeks ago, I read Dave Ramsey and so wish I had read him before. It is great you are trying to help your friend and you are probably right, she maynot open the book. She can call and talk to CCC advisors and they can give her tips. You have to "qualify" for the program...basically like pp stated..agree to give up using your credit cards which for me I needed an intervention like this. If you do use them, you risk being kicked out so to speak. After reading Dave, we have started paying more on the CCC "loan", my husband is saving for his car so we will not have payments. Good luck to your friend. Money Management International is the CCC I went through online. I found them off of a government..FtC I believe it was. DO NOT GO THROUGH JUST ANY DEBT CONSOLIDATION COMPANY.

 

[Planogirl]

There are other good debt counseling companies out there but be careful when you sign up with one. Make sure that you get recommendations and that you pay little if any fee.

 

[kaytieeldr]

Agree with Planogirl - there are other companies like CCC. They're not debt reduction companies. They're credit counselors. Your entire payment should go toward paying your debts; if I recall correctly, from a former job, the credit counseling firms request a percentage from the, um, debtee(? - I can't think what you call it at the moment, but the company owed) as their own payment.

 

[bettymae1121]

Another vote for CCCS. Make sure it's the "good one" as many companies use a similar name. You should be able to find a link to your local office through United Way's website.

She should be able to do this on her own since she seems to have income enough, but sometimes people don't have the will power to do it on their own, and in that case CCCS is the next best thing.

 

[howlongtildisney]

My husband actually does grant writing and grant administration for CCCS. I highly recommend them. http://www.cccsinc.org/

 

[2Tiggers]

I would recommend her reading the Dave Ramsey book you gave her. She can do it on her own. It will be tuff, but she can do it if she wants it.

I wish her well!

 

[PinkRhombus]

Thanks guys. I loaned her my Dave Ramsey book, but who knows if it has been opened. I'll search and see if any churches are doing any of the classes, thats a good idea.

If you listen to Dave's show much, you'll hear people calling in asking about those services. He's not a fan of them.

 

[SarahKate]

Another vote for CCCS!!! This is definitely legit, as you've probably gathered by all the other posts. I wouldn't even recommend any others because there's too many shady ones out there.

I used CCCS maybe about 11 years ago when I got a little in over my head with cc debt. It was great.

You can't use ANY credit cards while you're in the program, which is a great way to keep your self accountable. The hard part is that once you are out of the program, you have to keep YOURSELF accountable and stay away from using the cards so the debt doesn't built up again.

It really is a great organization and the one in my area had a lot of budget-related courses like first time home buying, budgeting, etc.

Good luck to your friend!!!

 

[WildGrits]

Another vote for the CCCS. You actually make an appointment and meet someone, not just a phone call of internet interview.

We are half way thru paying our Credit Card debt and could never have done it on our own.

Mind you there are a few things you have to keep in mind:

They don't take everyone. If you already have low interest rates they can't help you.

You will have to stop paying your cards which causes you to show non-paymants on your credit report.

If you have a loan at a bank for a car or such, you will not be able to defer a payment while on a DMP.

For us it was the answer. We were drowning in debt and the phone was ringing off the hook. Now with a DMP, we are paying almost half as much a month than we were without the help.

 

[ctinct]

Another vote for the CCCS. You actually make an appointment and meet someone, not just a phone call of internet interview.

We are half way thru paying our Credit Card debt and could never have done it on our own.

Mind you there are a few things you have to keep in mind:

They don't take everyone. If you already have low interest rates they can't help you.

You will have to stop paying your cards which causes you to show non-paymants on your credit report.
If you have a loan at a bank for a car or such, you will not be able to defer a payment while on a DMP.

For us it was the answer. We were drowning in debt and the phone was ringing off the hook. Now with a DMP, we are paying almost half as much a month than we were without the help.

Are you sure you used a legitimate CCCS? As I understand from what I have heard, it's not that you don't make payments-you give the money to CCCS and they make the payments for you, after having negotiated lower rates, more time etc.

I think what some of the for-profit places do (and some of these places are VERY shady and some are legit, although they are in business to make money, and therefor have higher fees than CCCS) is have you stop making payments to your creditors. While you are not paying, they hold your normal payment amount so that you build up a chunk of money. The creditors call, and maybe they eventually sell it to a collection agency for pennies on the dollar after they have given up hope of ever getting their money back. THEN, your "debt counselor" offers to pay whoever now holds the debt a fraction of the original amount, and hopefully the creditor agrees. They don't always, and sometimes can sue, garnish wages, etc. An agreement of "settled for less than the original amount" and any collection accounts are far worse for your credit than working with a legitimate CCCS. Sometimes you can find one through United Way. Also, please understand that not-for-profit doesn't mean free. They will still charge you a fee to cover their costs, but it will be much lower than the for profit places.

 

[HHSTigerFan]

If you listen to Dave's show much, you'll hear people calling in asking about those services. He's not a fan of them.

Of course he isn't, they are his competition, and despite what many think, Dave is all about Dave..

We went thru this route, had $28K in CC debt with rates in the 20% range, called them like Dave said and they just laughed.. Called a CCS and the rates were dropped anywhere between 6%-9% within a few days, payment of $775 a month for 5 years.. They do charge me $40 a month, but are also saving me about $300 a month in interest here at the start of the program..

And we do use the debt snowball concept within then the DMP, paying as much as we can on the smallest card, our goal being CC debt free by Christmas of 2012..

 

[HHSTigerFan]

BTW- When we joined, I didn't understand the entire process, stopped paying our CC's and just sent money to CCCS.. There was a gap in there and 3 of our 9 cards ended up being reported late 30 days.. The late fees were eventually reversed, but the nicks on the credit remain..

So just watch your accounts the first few months while they get the due dates in sync...

 

[vicki_c]

Are you sure you used a legitimate CCCS? As I understand from what I have heard, it's not that you don't make payments-you give the money to CCCS and they make the payments for you, after having negotiated lower rates, more time etc.

We met with a CCCS counselor in the past and she pretty much it explained it the same way. The underlying issue is that the creditors generally are not willing to work out a payment plan unless you are already behind. And the more behind you are, the less they may be willing to accept. If you are current on all your payments, they often aren't willing to work with you (the creditors, I mean). Had we needed to follow through with a CCCS DMP (thankfully we did not), my understanding was also that they recommended not making your payments for a period of time at the beginning.

If the creditors accept a negotiated settlement (so you pay them back less than what you originally owed), I believe that impacts your credit anyway.

But definitely CCCS is the way to go vs. those debt consolidation places you see on TV all the time.