Debt settlement companies

Hi all. New here, with a lot of debt. I am thinking of using debt settlement companies to negotiate with my creditors. They claim that they can reduce the debt by 50%. Has anyone had any experience with this type of approach??

Stay away from them. While in some cases they might be able to negotiate settlements for you, you can do the same thing for yourself without their help and you wont have to pay their fees. Also the way most are set up, you send them money to hold in escrow, then when you have enought in the fund, they start offering settlements to your creditors. Until that point the collection action against you will continue by your creditors.

The settlement company can do nothing to stop it, even if they tell you they can. Also keep in mind that you are responsible for the taxes due on the amount that go unpaid. They creditors call that amount the “forgiveness”.. The most important thing to understand about settlement companies is that while you are sending them money to offer as settlements, if you decide to stop using their program, and there is money sitting in the escrow account that has not been used, you wont get it back. Most companies are set up that way. I was a collector for long time, I have dealt with many of these companies. They are not a good solution.

The only one I’m familiar with is Consumer Credit Counseling. I don’t know if they are nation wide, but I know people who have had first hand experince, with great success and minimal fees. Not sure about reducing debt by 50%, but they negotiate with your creditors for lower or no interest/fees and a repayment plan to meet your budget.

Consumer Credit Counseling and Profina (the two I have used past) – they did not do this.

Profina did not actually cut any deals except making Bank of America drop the interest from 30% to 0% (that was good enough for me!!). They took a monthly amount by direct withdrawal and sent it to creditors. When a creditor continued to hassle me, the Profina lady got on the phone with me and talked to the creditor and reamed them out. It was great!!! They also split our accounts properly at divorce. They took $15 a month “donation” – but I think that was because Washington State Law limits it to that. I think you could probably do what they do on your own, but they did make it easier.

CCC – They did the same. I did not finish with them because the IRS sent prison notices on us during this time and I freaked and my mom paid the bills and I paid her back. But I delivered cash to them each month in person and they paid the creditors. No escrow, no huge fees.

I am aware that there are other agencies out there that are as you describe. I also believe that you can do all this stuff for yourself without the fees – it is like paying a maid service to clean your house. But they are not all terrible.

They are no help to you if you are still spending more than you earn, if you don’t have a budget, if you owe student loans, back taxes, utility bills, medical debts. CCC showed up on my credit report and didn’t look good. Profina did not.

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I do think you should look into a cheaper home

I do think you should look into a cheaper home. Your credit card debt is not going to just go away, and you’re just going to be swimming in debt forever if you continue with the lifestyle you have. You have to change your lifestyle, and it seems like the house is going to have to be the first to go. You have a fairly good income and you should be able to knock out the debt, if you didn’t have the burden of the enormous house payment to meet every month. I’m new on the list, and I don’t know what part of the country you are in or your family situation but $2500/month seems like an expensive mortgage to me. I understand that you want to keep your house, but it is not a blessing; the payments are a curse.

You don’t need to pay someone else to take care of your money, you can do it yourself. I hope that you find peace and if there’s anything we can do to help, just send up the white flag :) With 14 credit cards, your situation isnt unusual, it is quite common these days. As you said, they are current this at this point, but that changes this month. Something to consider is trying to take out the smaller balances first.

There is no good way to pay off credit cards. the interest is killer, and as soon as they go past due, the interest is going to jump, and your creditors will start hammering you with late fees and possible over limit fees. You mentioned debt consolidation and managment, do not waste your time with those. They will eat up your money and 12 months down the road your will posibly owe more money than you do now. If your accounts are current now, you still have time to work on this before permanent damage to your credit report. They wont create permanent damage until the delinquency hits 120-180 days.

A lot depends on where you live, what state, the laws vary. The best suggestion I can make is keep the house current, and look at your cc balances. the small ones, pay them off asap, like in 1 payment, if that means others dont get paid this month, so be it. Your situation is fixable, trust me it is, but there will be some residual damage, there always is. Do not turn to a dept managment program or a consolidation program, trust me you will regret it 12- 18 months from now. With the number of credit cards that you have, continuing to make payments is a futile endeavor, you can not, and will not fix this problem, making payments like that. it isnt mathematically possible. You can fix this, it just takes some determination and a different approach.

You don’t have to go through a “Debt Settlement” company for this either. (They cost money and a lot of them are less than honest). You can do it yourself. It takes good organization (to remember who you wrote which letter to when). This is accomplished with a few minutes time, some file folders, and a good spreadsheet. But you can write the letters (there are lots of websites to tell you how), mail them registered mail return receipt requested (at the self-service kiosk in your post office any time day or night), and keep track.

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I’ve been using a company called Greenpath

debt settlementI’ve been using a company called Greenpath for almost a year now. Their website is www.greenpath.com. They are great. It costs me $50 a month for their service but they were able to make agreements with my creditors, lower my interest rates and payments. I make 1 payment to them a month and they distribute it to my creditors. Since October of last year, I have paid off almost $5000 of my cc debt. You should check them out.

This sounds like a typical scenario of debt out of control. But, the best part is you can get it under control. So, Robert, have you looked at every little line item expense and found everything that you can possibly cut out that you don’t need? Any extra ten dollars saved in one place can be applied to a credit card with the largest balance. That’s what I have done in the past.

Slowly you can whittle down the credit cards one by one. Another thing that comes to mind, have you done a balance transfers to buy you time? I can’t think of anything else at the moment. Do you pack a lunch or eat out all the time? You won’t believe how much you can save by making your own meals to take with you or eat at home. You were able to run up these credit cards without any thought about the purchases I presume but now you have to think hard about how to pay them off. It’s not easy, it just takes time and a lot of willpower. All involved have to be on the same page too in order for this to work. Slaying debt has to be the number one priority now.

There is an alternative for you if you don’t care about your credit rating for the time being. It is called debt settlement and this is how it works.

If you decide to stop paying your Credit Cards, they will sell your debt to a collection agency normally within 60-90 days from the first missed payment.

They sell your debt to a collection agency for 2 reasons:

  1. They get .20 cents on the dollar from the collection agency.
  2. They get an additional .50 cents on the dollar from the government in the form of a tax break.

Once your debt has been sold to a collection agency for .20 cents on the dollar, debt settlement companies go to work on your behalf and send them a “Cease and Desist letter”. By law, the collection agencies are no longer be allowed to contact you, and the phone calls stop.

The debt settlement company informs the collection agency (on your behalf) that you intend to pay them .40 cents on the dollar, giving them a 100% profit, in exchange, they will to report to the credit bureaus that your debt was paid or settled. End result, you get rid of the credit card debt in a much shorter amount of time.

You take a hit on your credit rating for a bit, but you will do that anyway.

I did this exact thing I am doing myself. My only regret – I didn’t know about it sooner.

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