I keep hearing it's not a good idea to use them. They say they're rip offs and they don't pay your debts they make you save your own money. I have an apt. set up tomorrow with a rep and I need to know and make a decision soon. I started to use one 2 yrs ago but I've changed my money. I need some help on this please.
I thought they paid off your debts to your debtors, then charged you an insane amount of money in interest, over a long period of time, to pay them back.
I've never used one.
oh is that how it works? Maybe it was just one of the companies or a comment I saw where they have you put money in separate bank account and that's what's really used to pay the debt. I need to do more research. So the interest is a lot then how are they helping people then.
Nope, I was wrong, looks like you are correct, They negotiate a lump sum payment with your creditors, and charge you a % of what you save. They have you make deposits in a bank account to save for the lump sum payment.
Sounds a bit dodgy to me...
wow I am getting that same info a lot. that's insane.
You will be better off making a budget & doing this yourself. Learn about snowballing. It's a great way to pay stuff off but you have to go on a financial diet & stop spending. First step cut up ALL but one credit card. Seriously cut 'em up so you can't use them. Now the one you kept, wrap it in plastic wrap & stick it in a plastic bag; compress out the air. Put that in another plastic bag & fill with water. Now freeze it so it's a giant p.i.t.a. to get at. Set up a weekly cash budget for yourself & know that is all the money you get. When it's gone, you can't go out or spend. You are going to have to learn to cook; no more lunches out; no more morning coffee -- bring your own. Look for free entertainment -- the library, board games, etc. It sucks for a while but you can make it a game. Do include some money for entertainment & treats. You will fail if you go too austere.
I agree with Tee. You'd be better off going to a debt counselor to learn how to economize and pay off your debts.
you could take out a low interest personal loan to consolidate debt but the best way seems to be the Dave Ramsey method - pay everything on time and take your smallest debt and pay a bunch extra on it each month until its gone, then target the next debt. Soon you will be down just to your car and house (if you have one)
What do you mean you started using one two years ago? If you've already had a company consolidate and settle your credit balances for you, then there's no changing your mind about it. You owe them now, not your former creditors. Your previous balances will be recorded as "settled" on your credit report. That means you can most likely kiss any chance of getting a new workable loan or credit card any time soon.
If you haven't already settled, then you'll have to evaluate for yourself just how badly positioned you are financially. For the vast majority of people, it's better to tighten the belt as much as humanly possible and continue working directly with your creditors to get the balance paid more quickly. But if you're in a spot where you sincerely would be choosing between getting evicted or inevitably defaulting to the point your credit's going to get trashed anyhow, then it sadly may be an option to consider. Even then, it's better to see if you can consolidate your full debts through other means first. A debt settlement company definitely shouldn't be your first, second, or third choice. Your options will heavily depend on the state of your credit, though.
Your bank may offer some form of financial advisory services. Check with local and reputable non-profits. And be diligent about that. A lot of predatory debt relief companies will masquerade as advisers pretty much to sell you on the service. But if at all possible, you'll want to sit down with someone with whom you can properly go over your specific financial circumstances to explore how best to balance your livelihood and your credit.
I disagree with freezing the credit card. I would keep one and only use it in true emergencies while an emergency fund is built. True emergencies are you are stranded with a broken down car and its physically safer to pay the tow company with the card vs advertise the cash you have (not that the driver is not safe - but if you have a dispute or a third party sees you whip out a wad of cash...( - and pay it right away before the bill comes. I agree with everything else 100%. But ask the company to lower your credit limit big timeOriginally Posted by TeeDee
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