Archive for the ‘debt consolidating’ Category
April 7th, 2010 | 
Author: i.e. personal loans plus un paid bills.
The Citizens Advice Bureau.
Posted in 
The first thing, really, is to keep your eyes and ears open. There are always a number of credit card debt consolidation offers available for you to choose from. http://www.cpa-financial-debt-strategy.com
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Tags: I’m 26 years old and I’m buried in credit card debt. I owe about $30,000. I just finished College and I’m leaving to the Air Force next week. I’ve been doing some research and I found a debt consolidating company that promised to reduced my credit card debt by 60%. They told me to stop paying my creditors and let my accounts go to deliquent status. Once in deliquent status, they will come and they will try to settle the accoutns at lower price. I have the following questions:
1) is this a good strategy?
2) How this will affect me in the long run?
3) Is there an alternative way?
4) Should I file for bankrupcy?
Thanks
This is not a good strategy. If your debts get reported to the credit bureaus, you will suffer from it for years to come. Some debt consolodators rope you into contracts that take years to resolve. You will have trouble buying a car or getting a mortgage. You may not be able to rent an apartment if there is a credit check involved.
Most military bases have a credit union. You may want to go there and see what a loan would cost you – a debt consolidation loan, if you will. They may also advise you as to what your other options are. for instance, do you have anything to sell that you won’t be taking with you into the Air Force? You must have bought something with the $30,000. Don’t count on storing "stuff" at mom and dad’s. They don’t need the hassle of working around your things while you are away. If the debt is all for school, you may be able to get a loan for that; even at 7% it is better than the rates you are probably paying.
The military will put you on a "watch list" for counseling if you file bankruptcy. It can effect what level of security clearance you will receive and therefore limit the jobs you are assigned to.
Finally, you may be able to find a credit card that will take all your old debts and put it on one account. Many are tied to the prime rate and it is falling, whereas if you stop paying on a card, they will jack up the rate to 18 – 23% depending on which state they are headquartered in. Then they sell the debt to get some money back and the bill collectors add 50% to the amount you owe. So, doing nothing is not an option.
I have some credit card debt, it’s not to much compared to other people. Like, i would say, a couple thousand. I wanted to know if there were organizations out there that would help me negotiate with collections to lower my debt. That way i could just pay it off in full.
You don’t sound like to your completely stressed out in debt so my advice would be to contact each creditor yourself and request a lower rate. Be polite, patient, and persistent. Ask to speak with a manager. If necessary, threaten to transfer your money to another company that is offering 0% APR for 1 year. Once you have secured the lowest rate possible, then focus on paying your credit card debt down to $0 as soon as possible. Do not use your cards, pack lunch, cut Starbucks, penny pinch for a few months.
Getting out of credit card debt will be one of your smartest financial investments Then you can start taking your extra money and saving in a money market mutual fund or something. Let your money make you money.
If things were worse, there several options if you are treading water in overwhelming credit card debt:
1. stay the course – worst idea, it will take many years and triple the cost of what you borrowed to pay this off. This is what the credit card companies want and they are robbing the American public blind.
2. debt/credit counseling – go with a local non-profit organization. They can work with your lenders to make one monthly payment and try to put a tourniquet on your debt. You will eventually pay back every penny that you owe. This will appear on your credit report, but will not do damage to your score. Beware: some lenders treat this like a chapter 13 bankruptcy.
3. debt settlement- probably the ads you have seen were offering debt settlement. Basically, instead of paying your creditors you pay yourself (deposit funds monthly into an escrow account in your name). As the trust fund grows, the debt settlement firm will negotiate with your creditors for lump sum payment. DS will affect your credit history negatively, but if your scores are already bad, the process will help the balance to limit ratio part of your score. Takes approx 12-36 months and can save you 50%-70% on your debts.
4. debt consolidation – take out a secured or unsecured loan from a bank or credit union (perhaps against your mortgage or car) and pay off all of your debts. Ideally, you receive a lower fixed rate at the bank than the high APR’s with the credit cards. Cons are higher payments and may be difficult to qualify for with today’s tough economy, especially with a low credit score.
5. Bankruptcy – do what ever you can to avoid this scenario. This NOT a clean slate. It is much harder to qualify for a chapter 7 bankruptcy (the clean slate one) than it was 4 years ago. Chapter 13 bk’s have you paying all of your debts back under a court order. All disposable income for 5 years will go towards your debts. More than half the people that file for ch 13 drop out. Bankrupcty is hard to recover from. It is the worst possible mark on your credit report and will be there for 10 years.
If you have any questions, I run a credit and debt management firm in San Diego called The Credit Insiders http://www.thecreditinsiders.com/ and can be reached at 866-229-6233.
Hope that helps,
Scott
You will probably get the best interest rate from your own bank. Most debt-consolidation companies charge a rate almost as high as credit cards. If you deal with more than one bank, go to the one that holds your mortgage. If you don’t have a mortgage, go to the one where you have your chequing account.
Loan consolidation is a purely financial act. It has little, if anythin to do with divorce other than to put all of your debts into one payment package. A good first step in a divorce is trying to work out the differences in your marriage. Get a third aprty, a counselor or therapist to act as an intermediary. Divorce can be very expensive, but it is also a very emotional act. You should try to find some common ground with your spouse. Maybe it can work.
We have a ton of debt (who doesn’t?) and I want to start paying, but I am looking for a good program that can help me budget more than just meeting the day to day expenses when we already live paycheck to paycheck.
I wanted to add that we don’t have ANY credit cards- we either use cash, check, or a debit card to make purchases, and we don’t have a savings, so when the money is gone, its gone!
The best program I can recommend is the one my wife and I are on. It is called the Total Money Makeover by Dave Ramsey. More on that below.
First, Do not use a debt CON-solidation outfit. They are A. mostly scum. B. won’t do much more than you can do yourself. and C. go on your credit report.
You can do this yourself. You just need to be strong. One person that can help is a guy by the name of Dave Ramsey. He can be seen on the Fox Business Channel and heard on the radio. Go to www.daveramsey.com to find stations and times.
Dave has a book I highly recommend you read. The Total Money Makeover. My wife and I ran across him on TV one night and started watching. After about a week of this weird guy on TV talking about dumping debt and not using credit cards, we looked at each other and said, this guy really makes sense. I went out and bought the book and read it in 1 day. I felt like I got hit in the face with a bat after realizing all the dumb things we had been doing with money. What an eye opener! My wife read the book the next couple of days and she felt the same way. Since then we have been on his plan. If you are married, make sure your husband reads it as well. You have to have buy in from both sides if this is going to work. If you save every dime and your spouse is out spending freely, it won’t work. You have to get mad at your debt and it sounds like you are at that poing. This includes making a budget and sticking to it. That is the whole key. We have changed our spending habits. The toughest part of the whole thing for us was, looking in the mirror and realizing what big idiots there were looking back. It will show you how to build an emergency fund, prioritize debts and start paying them off, saving for college, investing, insurance…..etc.
Like I said above, this has really helped our family tremendously in just a short time. We started in November. We had a CASH Christmas. Nothing on credit cards and have since paid off both cars ($800/month) almost a year early. We stopped going to restaurants, bars, movies, vacations, etc. until we are out of debt. We stopped buying garbage we wanted and only buy things in our budget that we NEED. By not going out to eat, we save about $600/ month which we now apply to our debt. That $600 combined with the $800 we save on not having car payments is a good chunk of change to pay on all of our other debts. It was not easy to change but once we started seeing the results, we know we are on the right track. I know this sounds like a commercial, but We are very passionate about this program. And the best thing is that once our eyes were opened to our stupidity, we know we do not need debt Consolidators. We are doing it ourselves and winning, and it feels great to win. We now tell our money where to go every month instead of wondering where it went. It will be tough at first but stay strong. Imagine how you will feel in a couple years when you are standing on the other side with absolutely no debt. Pretty cool, eh? The journey of 1000 miles begins with the first step. Sorry, This got kinda long.
It sounds like you are in the right frame of mind to get things started. I wish you all the best in your journey.
Good luck.
I am looking to buy a property in Columbus, Ohio. I have been approved for a $50,000 loan (Not looking for a fancy house, just something small that suffices my needs), but I have slightly over $7,000 worth of credit card debt. Is it possible to buy a home for, let’s say $40,000, and then increase my mortgage to $47,000 by adding my credit card debt to the loan?
Is there any possible way to do this?
Thank you in advance!!!!!!!!!!!
Also, I’m a first-time home buyer
–I don’t have student loan debt.
I only have Credit Card debt.
No you won’t be able to because a mortgage is a secured loan. You won’t find a lender that will lend more than 100% of the home value. If you don’t have 20% down you’ll pay pmi as well. Pay off your credit card debt, save some money up for down payment and get something where the payments are no more than 30% of your take home pay.
Hi,
I’m a first-time home buyer with excellent credit ( around 740′s ) and I’m in the process of buying my first home. I have some credit card debt that I would like to roll into my mortgage. This would help me out significantly from a cash flow perspective. What are my options and how would this effect my rate. I also have about 5% down saved up.
Thanks.
In the first place if you can scrape up 20% down you can save yourself a lot of money in not having to get mortgage protection insurance. Adding in other debt into a mortgage will seem to give you better cash flow right now, but in the long run it’s not a good idea. You could in effect be paying for that tank of gas you bought on that credit card for 15 to 30 if the debt was rolled into your mortgage.
I have approximately $2000 of credit card debt that I absolutely need to get paid down. i talked to consumer credit counseling services, a debt consolidation company, http://www.cccsstl.org/ and this is what i was told:
Basically they would cut my payments down to about $130 a month total for 3 cards by getting my interest rates lowered to between 6 and 10% approximately. I would pay it off in 2 years instead of 8 as i would now without consolidating. he said the $130 a month payment included a monthly fee of $49 directly to the credit counseling service for their help and services. Is that the normal thing when consolidating? Is that legitamet? I would only be paying $80 or so a month on the actual credit card debt and that doesn’t seem like very much to me.
Anyone have any knowledge in this area? Is consolidating a smart thing to do and does it hurt your credit in any way? Is there a smarter way to do it?
LONG-sorry and thanks!
I have placed this in the source box. There is a wealth of information there and a great free debt management software program. I bookmarked the site as I return to it often for the advice it offers. I hope this helps you.