debt elimination...

Discussion in 'General Discussion' started by Lumpy, Jan 11, 2008.

  1. Lumpy

    Lumpy Taylor Swift Actionmaster Super Mod

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    okay, i know we're all probably seen the commercials, pop ups or unrinal ads that talk about eliminating your debt...has anyone ever tried them? i could use the help, but am skeptical about it cuz i want to know how these companies make their money...so if anyone has used one before, please let me know...
     
  2. funkatron101

    funkatron101 TFW2005 Supporter

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    I assuming you are talking about debt consolidation. Basically they consolidate all of your loans and debt into one big loan. Depending on the service, you may get this loan at a lower interest rate.

    But likely they will have extra fees involved that really just make it convenient that you are paying one loan, but you aren't saving much.
     
  3. drippy

    drippy is a freethinker.

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    Pay the most you can on the debt with the highest interest rate each month. Make the minimum payments on all other debt. Once the debt with the highest interest rate is paid off, go to the next highest. Continue to make minimum payments on all other debt. Call credit card companies or other lenders to see if they will adjust the interest rates down for you. Often times they will if you explain the situation.

    Using the services you mentioned typically result in fees in addition to negatively impacting your credit rating.
     
  4. yodafett

    yodafett Well-Known Member

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    Actually, I assumed he meant the Credit Counselling places. They typically negotiate a lowered payment amount with the creditors, but you have to be careful, because they can be sticky, and it can often times take much LONGER to pay it off (kind of like a short term car loan vs. a long term car loan, it's the interest that gets you). One missed payment can throw the whole agreement out, and a lot of them will show up as "settlements" on your credit, not as a "pay off in good standing". As a general rule, if you can find a truly non-profit credit assistance program, talk to them and get details in writing, then wait 24 hours and think about it. Don't let them hard sell you, becaues most of them make their money by getting a cut of the payment that's being made in your name. IMHO, the best path is generally to buckle down and make the payments and as good of an arrangement with the creditors yourself. It sucks and its tough, but the money was borrowed (whether a loan or a credit card, same principle), and needs repayed. This is not coming form a holier-than-thou position, either. I'm in the midst of repairing my own credit from several thosand dollars of debt from my younger and stupider days, including a judgement against me from Discover (do NOT stiff them, they will come after anything they can, no soft ball in that game at all...) in the upper 4 digits. :(  Long story short, my credit will still suck for a few more years, but I know exactly what's floating around out there and I have the personal satisfaction of knowing that I made good on my end of the contract, even if I stumbled quite a bit along the way.

    Bearing that in mind, don't just hand over money to a collection agency without doing your research. I've had 2 different companies try to collect the on same debt, which had been paid off several months prior to either of them "acquiring" it. So keep your documentation, and don't be afraid to ask fo rdocumentation on a debt from a collection agency. I heartily reccommend you research a collection agency before speaking to them, as well. Feel free to PM me if you want to know anything else, or if I can give more direct knowledge.
     
  5. beatrush

    beatrush Collects too many things

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    As well, some of them may advise you to declare bankrupcy and they'll negotiate settlements on your debt.

    Something you should never, ever do unless you are very, very, very desperate.
     
  6. tusko

    tusko Well-Known Member

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    I've seen the ads but have never tried these "services".

    I think you need to take a weekend and really understand how much cash is coming in, how much goes out regularly (food, rent, phone, dog food, etc) and how much debt you have.

    Then as mentioned focus on trimming back and paying off the highest interest rated debt first. I'm sure if you talk to the banks and credit card companies you can do the same thing as what is advertised.

    Also you'll learn more, be more responsible and therefore be invested in the process and probably save yourself a transaction fee or two.

    Good luck!
     
  7. ckhtiger

    ckhtiger old skool fool

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    I had 18,000 in credit card debt at one point. all I did to get rid of it was to keep doing balance transfers to cards with 0-3% interest. then, when (or if) the offer expired, I'd just transfer it to a different card. I basically had 3 cards and just rotated the balance between them all. took care of the debt within 4 years or so.
     
  8. Gort

    Gort Klaatu barada nikto TFW2005 Supporter

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  9. funkatron101

    funkatron101 TFW2005 Supporter

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    That's crazy.
     
  10. MegaPrime33

    MegaPrime33 Follow me @NerdActivist TFW2005 Supporter

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    ^Agreed. This is exactly what I did with my debt, now I have just a little left on the lowest apr card. And I was finally able to cancel a couple of cards as well.
     
  11. Cheetatron

    Cheetatron Eh

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    That is incredibly balsy I though most card companies only allowed for one balance transfer.
     
  12. tusko

    tusko Well-Known Member

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    I also will chime in, that I don't think this works as easily as described. There is a balance transaction fee, or cash advance fee on most cards that is very high. You'd really have to do a lot of research and read the fine print to get the right credit to do this.
     
  13. Prisoner1138

    Prisoner1138 TFW2005 Supporter

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    The debt consolidation companies make their money on the fees they charge you, and the raping they dish out if you miss a payment. If paying off more than one bill at a time is that much of an issue for you, go ahead with these people. Just be very, very careful and do plenty of research.

    But, the time spent doing that research could be time spent learning how to dig yourself out of your own hole.
     
  14. drippy

    drippy is a freethinker.

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    Nope.

    Citibank to BofA to Chase Manhattan to Amex to Discover.

    or

    Citibank to BofA to Citibank to BofA to Citibank to BofA.

    not

    Citibank to Citibank to Citibank to Citibank to Citibank.

    As long as you don't mind paying a processing fee (i.e. 3%) for each transfer, knock yourself out.
     
  15. ckhtiger

    ckhtiger old skool fool

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    believe it or not, while I did have to pay a $40 fee on maybe 2 of the transfers, the fact that you maintain the low rates for 6 months to a year at a time means that you don't have to do too many transfers. but some of them were actually free of a fee.
     
  16. Bryan

    Bryan ΜΟΛΩΝ ΛΑΒΕ

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    Word. I'd add cutting up all the cards to make sure that you're not undoing all your efforts simultaneously.

    Those other services are functionally selling you the promise of an easy way out--it's appealing, but it's not real.
     
  17. Spekkio

    Spekkio Master of War

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    I could be wrong on this (heaven knows most of the crap that comes out of my mouth is 100% pure American BS) but I think some rules/laws were passed to help prevent consumers from getting scammed by "credit fixing" companies. I think said stuff is under the care of the Federal Trade Commission. Check out their website - it might be helpful.
     
  18. Moonscream

    Moonscream YES, We EXIST!

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    At the same time you're looking into the companies, check your state laws on debt relief/forgiveness/default, especially if you have a low income and really CANNOT make any payments. For instance, my state of Washington allows people without a lot of income and assets to write a letter to each company telling them that there is no way you can pay the debt, so to leave you alone. It has the same effect on your credit as a bankruptcy does, but costs nothing.

    I did the debt consolidation, credit counseling, balance transfers...and ended up defaulting. And I thus learned the hard way that unless you get rid of the damn cards entirely (aside from those which are debit cards since the money is paid immediately) or get the self control of a chaste monk, you'll keep falling back in the hole. I rip up all credit card offers now.

    --Moony
     
  19. llamatron

    llamatron Shut up, Nigel. TFW2005 Supporter

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    Perhaps it's too late for this advice, but don't get into debt in the first place?

    My philosophy is something similar to the following...

    Do I have spare money to spend?

    If yes, spend or invest it. If no, don't spend any money. TADA!

    I only plan to go into debt for a home loan. Thankfully, with a home loan you're not just pissing your money away either, as you should see a healthy growth on a house. Assuming of course there isn't a bunch of subprime loan bullshit going on.
     
  20. aussiehippy

    aussiehippy Au contraire, Blackadder.

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    Those consolidation companies basically charge you for the service of shrinking your monthly outgoings.

    Put simply = short term benefit, long term loss.

    It can help, but only as a last resort. The best way to cancel debt is to reduce your variable outgoings as much as possible, maybe get a second job, and then pay off your debts, one by one, as much as you can each month.

    I'm about halfway through killing my debts, it's a slow process, but it is doable without giving even MORE money to leeching financial institutions.
     

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