Drowning in credit card debit and don't know what to do

[sped2teach]

I need help. I have some credit card debt and would like some advice. I just talked to a debt consolidator and it sounded like a scam. I am about $20,000 in debt and would like to know a way out. I am behind on any of my cards but would like help on getting them paid off. I have heard that closing them is a good thing to do and writing the company and asking for lower interest rates is good---how do I go about that?

[kb9tbq]

Here is some general information I have posted about cccs & alternatives to using these companies.

http://debt-consolidation-credit-repair-service.com/phpBB2/viewtopic.php?t=65

Hope this may be of help to you.

Note: Information at the link covers the dangers of using cccs companies, and which is followed by ideas to fix the problem youself without having to rely on these companies.

[Capepuffin]

Don't use a credit repair service!!!!!!!!!!!!! They are a scam! Read everything that you can on this board. You can do this yourself. Everyone here will answer all of your questions. Don't close any accounts.

You need to read alot here. Start by doing DV letters to the CA's. Look up at the top of this board and you will find links to all the info. that you need. Sample letters, FCRA, FDCPA etc...

But first start with the debt validation (DV) section. Then come back and ask all of the questions you want!

Happy Reading!

Oh yea! And definately listen to kb9, she knows her stuff!

[hotdami812]

capepuffin is correct, DO NOT USE A CREDIT REPAIR ORGANIZATION, if you are not behind on any of the cc than start by changing your behavior on spending, put a budget together and stick to it, certainly request lower interest rates but do not close any of your accounts will lower your scores for sure.

then start paying your higher interest rate cards by 50.00 or more and pay minimum payments on rest until you paid off the first one, then continue with the same procedure with all until your paid off. this is going to take alot of effort on your part as well as your family. just stick to the budget and you will be ok. your objective is to become debt free while maintaining a good credit history. This is what I call self administered debt management plan.

Good luck.

[strix77]

Credit repair will definitely lead you to BK. Thats what happened to me. Be warned

[md]

It is not clear to me that this person is actually behind in his/her cc payments yet. If not, then things are quite different.

If you let the accounts get behind (if that is where they are inevitably headed) then the oc will close the accounts more likely than not. This probably won't happen right away, but as you become more delinquent then that is what will happen. That is the only reason I could think of as to why you would want to close the accounts first. It is better to have an account closed by consumer than by creditor.

Have you contacted the creditors about a hardship program? Some of them have them with very good terms (i.e. MBNA). If you ask about it they will want to know if you want to apply for it. Chances are once you apply (whether accepted or not) they will close your account. Again, having them close your account may be the least of your worries. The goal is to try and pay the full balance if they are not late.

Sometimes their hardship programs help with this if you do what others said (pay minimums on all except the one with the highest interest rate; attack this one with all of the extra money you can come across, repeat once this one is paid off). And sometimes legitimate CCC type companies can help. You need to be extremely careful with these as many of these "non-profit" companies are scams and rob you of that first payment to help make the executives very rich. There is no need for a legitimate non-profit company for the full first payment to set things up and pay costs.

If it is clear that these options won't help or you are in more financial trouble than can be dealt with then there is the option of trying to settle the accounts. This decision should be weighed very carefully and know what will happen once you do settle. You will need to go behind on most all of your accounts. They won't talk settlement until you are at least a few months delinquent and are also delinquent on your other accounts. You will also need a lump sum to pay the settlements. Perhaps friends and/or family could help with this. For $20,000, you will probably need between $9k and $13k to settle. You can often stretch it out over 3-4 payments, depending on the creditor. Your credit history will be destroyed as a result, but can be repaired. While I think it would be next to impossible to negotiate for a "Paid As Agreed" notation, it may be possible to seek deletion as part of the settlement.

If you get to the point of working with a CA, do everything in writing and send them a limited C&D so they can talk to you only by mail. Any agreement reached must be in writing before any payment is made. A CA notation you will want completely removed from your credit report as no matter what notations may be there, it will be viewed negatively.

If you are dealing with the OC then you may have to do some or most of your communications with them by phone. Any agreement, however, should definitely be in writing before payment arrangements are made.

If you are unable to settle for whatever reasons and things are looking very bad for you, then there is bankruptcy. Again, this decision should be weighed with great caution. While you may not like the idea or possibility of filing for bankruptcy, for some people it really is the best option.

Remember, most of these things you can do by yourself and will save much money in doing so. For instance, if your creditors all agreed to settle at 50%, you would pay $10,000. However, if you went through a debt settlement company than it would be between $12,500 and $13,500. They take a percentage of what "they" save you.

Finally, READ, READ, READ!!! Read everything you can on this board and ask questions. Good luck! I know what you are going through and am towards the end of my settling process, just have to make two more payments to my last creditor out of an original 6. It can be done. I was able to settle for between 40 and 55 percent on all of them.

[strix77]

Very good point! These boards are great