Debt Settlement, Credit Reports and Debtor Reputation; American Financial ... Seattle Post Intelligencer
Paying less to get out of debt seems like a great solution. But there are real ramifications to your credit and credit score when using debt settlements to manage debt. Credit counseling agency American Financial Solutions provides the information needed to make the right decision about settling debt.
Seattle, WA (PRWEB) May 10, 2012
Many people dealing with unpaid debt have received letters or phone calls from collection agencies offering deals to settle accounts for less than the full balance owed. When someone settles a debt, it means they pay off a portion of what they owe to the creditor. This sounds very enticing, but that discount on debt comes at a very high cost to an individual’s credit report and reputation. Below, American Financial Solutions outlines the dangers of settling debt.
The damage done to a credit report from a debt settlement is significant. During the settlement process, many collection agencies make it sound as though, once paid, the account will show in good standing on the credit report. The reality is that the account will be marked on the credit report as settled for less than full balance. This is a derogatory mark and may cause future lenders to be leery of approving a loan application. It will also impact a credit score.
Debt Management Tips : Who Regulates Credit Counselors?
Each state has different regulating standards for credit counselors, but make sure the agency is affiliated with the AICCCA or NFCC. Choose a ...
What is a good credit counseling or debt management agency?
I am only 20 years old, I have 4 collections (that I know of) and all of my bills are at least 6 months behind. I have over $10,000 in student loans (but I'm still going to school). Which company would be the best for me?
credit guard
Have you ever used credit counseling or a debt management plan?
I'm thinking about using a credit counseling agency or debt repayment plan but I've heard a lot of conflicting information about them in my research. Do you have any personal experience with it? Would you recommend it? Thanks.
I have personally used credit counseling services. When I was young and dumb (not saying you are, but I definitely was) I ran up a lot of credit I couldn't pay off. Interest rates were killing me and late fees were adding to the balance every month. So I contacted a credit counseling service and frankly, they saved me from a horrible downward spiral.
Credit counselors are basically a go-between organization. They negotiate the interest rates down to a workable level and get late fees stopped. All in agreement that you will pay the current balance off over a 3 year period.
Positive
Interest and late fees stop racking up
Single fixed payment that is guaranteed to reach the credit company on time every month
One payment that is affordable - as opposed to all the small ones that come in at various times during the month and you can't ever seem to pay on time (thus incurring another late fee)
Negative
You will have to cut up your credit cards. The accounts are canceled
The credit company might place your account in "collections" status during the payoff process. But once the account balance is zero they will list it as "canceled," which could mean anything to a future lender (you canceled it yourself, for instance, which isn't a bad thing)
If you're over your head in debt and the late fees are adding up a credit counseling service is a good way to go.
A lot of people say debt consolidation loans are good too. However to qualify for one you usually have to be at least $10,000 in debt.
If you want to know more about credit counseling, or need to contact an agency, you can visit my site here:
http://www.1-800badcredit.com/credit-card-debt-counseling.html
I started this site because I've been there myself. And there's a lot of bad information out there.
Good luck to you! It'll all come right in the end if you can stop the bleeding!
Set up a strict budget for yourself. Eliminate the extras -- eating out, new clothes, cell phone, etc. Take every penny you can squeeze out of that budget and put it on the highest interest rate debt, while making minimum payments on the rest. Once the highest interest rate debt is paid off, move to the next till they are all paid in full.
If you make a concerted effort, you can clear up all your debt with 2 or 3 years.
Overall the concept is good, negotiate better terms so a merchant or bank is more likely to get some of their money back as opposed to losing it all. The problem is now these programs are being used to generate profits for third party organizations. Some of the programs are actually run buy the lending institutions themselves. The whole process has turned into one big scam. Not to mention the fact that after you complete one of these so called programs most lenders will not touch you with a ten foot pole.
Sounds strange doesn't it? If you repaid your debt why wouldn't they want to extend you more credit? The reason is that you allowed someone else to tell you how much you should repay your creditors and you did not try and work out a settlement plan with your creditors directly. Ultimately someone else got paid and left your creditors on the hook for more than they would have been if you had worked directly with them. Creditors look poorly on such behavior. What else could you have done? You had no money and everyone wanted to get paid.
If you are faced with a tough situation take a few moments and learn about the credit collection laws. Most people never take time to find out what they can do to stop the calls and that is what drives most people to bad decisions like joining credit counseling. After you learn about your rights contact your creditors by mail (return receipt requested) and let them know what the situation is. Explain to them how you are planning on paying them back. Ask them for their help. Most of all don't threaten them with bankruptcy just tell them you want to repay the debt as fast as possible. Ask them for help with interest rates and late fees. Ask them what types of payment plans they offer for people who have fallen on hard times. Also let them know if you have fallen on hard times due to a medical illness or a natural disaster and offer to send them proof. You may find they are more accommodating than you would think.
The lending institutions want to get all of the money they have lent out back but they know a certain percentage of people will default on their loans. If you offer to pay back a percentage of your debt you elevate yourself over the rest of the people who are past due. Your creditors will help you if you keep them in the loop. Most of all contact them early and often. Make sure they know your intentions. The longer you can keep your debt out of collection status the better off you will be. After they sell your loan to the collection agency they won't talk to you again.
Skip the credit counseling agency or debt repayment plan and work out a deal with your creditors all by your little ole self. You can do it and you will be better off in the long run.
Most of the Credit Counseling & Debt Management a rip-off?
I have gone through the Credit Counseling route before and after a year of payments to them, found out that they were not paying all my creditors. Ended up dropping them and continuing most on my own. They had a term the CC companies used (re-up or re-new, re-age?) that I asked the CC companies for and they continued as though I was using the couseling service. I can't remember but if you go through them (credit counseling agencies) will it affect your credit and/or score? Can I still use the "re-aging" of the credit card myself so as not to hurt my credit rating?
The company I used was Consumer Credit Counseling and even though I did pay off a huge chunk of debt, they still screwed me over on a few CC's that they missed paying.
Most of them do suck. I recommend a website/message board that is listed in my source. I am a member there and they have helped me get all the negatives off of my credit report and manage my debt.
It is just a message board full of people with useful information, some are lawyers and are extremely knowledgeable on the Fair Credit Act.
I used them several years ago and was debt free in 36-months.
more information is available here: http://www.insightempire.com/alberta-credit-counseling.htm
Would a personal loan to pay credit card debt be better then a debt management program?
I have about 25000 of debt but can still pay montlhy payments on time and never missed a payment...if I try to get a personal loan from say lendingtree.com as opposed to a debt management program which looks better to creditors?? My beacon score is around 650-670....I am going to a credit counseling agency to see what they think....they are HUD approved and non-profit. I still have some assets stocks and bonds totaling 6000...I do get paid consistently and been trying some internet surveys to make some small money on the side to my job. What things should I look for at the credit counseling agency? Such as if they are legit or not in my situation?
Hello, check these links, there's plenty
of advice throughout if you have time to read:
http://credit-cards.ebookorama.com
http://finance.ebookorama.com
http://credit.ebookorama.com
http://credit-repair.ebookorama.com
good luck!
if it helps please remember me cheers
If you are able to make your payments on time, you may not even qualify for their help.
Have you tried calling yoru CC's directly and discussing payment plans/ideas that would get you out of debt sooner? Perhaps if you add just $10 a montht they will cut your APR or lower fees. They really do try to help if you talk to them.
Also, 25K is an extreme amoutn of money for an unsecured loan. Unless you have a newer car you can put up as collateral, it would be VERY hard to get a loan that large.
1. Tell you to cut up your credit cards to prevent farther use.
2. Negotiate settlement amounts with each CC lendor. This is a 'write off' and will be reflected as such on your credit record.
3. Establish a set monthly payment amount that you would send to them and that they then forward to the various CC companies.
While your credit report would reflect the debt management program it would also reflect the settlement of your debts for less that amount owed. Thus, this will have a negative impact on your credit score albeit a less of an impact than if you got way behind and the accounts went to collections.
Here's my recommendation.
1. Create a list of all your debts and put them in a table that list who, current balance, monthly payment, interest rate, due date and credit limit.
2. Create a list of all your assets and put them in a similiar table that list Who, current balance, interest rate and penalty amount for early withdrawl.
3. Sort your debt list by Interest rate listing the highest interest rate first. You will want to 'pay off' from this list starting from the top and working down.
4. Sort your asset list by interest rate starting with the lowest. You will want to use the first listed funds to pay on your debt as these are the ones returning the least amount on your investment.
5. With these two list it will be obvious that retaining a large amount of cash that is drawing a small amount of interest is not good when compared to the high interest rate you are paying out.
6. Set a minimul amount of your investement asset that you want to keep for emergency.
7. Using your calculated available cash, begin to pay off or pay down your debt.
While paying down the debt with the biggest interest rate will save you the most over the long run, you may be better off paying down or paying off those where the monthly payment will be reduced the most and/or removed altogether. Thus, you might be able to use $4,000 of your investment to drop your monthly payments by over $150 and then you can use that 'extra' to compensate for the short fall in cash you have and/or pay down the other bills quicker.
All in all, you need to organize your assets and liablities in a manner that works for you and the go through a few scenarios to determine the best method for you.
Hope this helps and good luck!
Can anyone suggest a legit credit couseling agency that works?
Does anyone know of a goog credit counseling agency that is legit? Also, i have been told that in NC there is a law that prevents someone from doing debt management or debt settlement, is this true?
If you go to credit counseling, a lot of banks (when applying for a mortgage) view that as a bankruptcy. I do not recommend going to credit counselling (at least the ones that consolidate your debt and lower payments). You're better off filing bankruptcy.
I am a mortgage consultant and see too many borrowers who think they were doing the right thing by going to consumer credit counselling when, in the end, they were viewed the same as those who filed bankruptcy AND were still making payments to those creditors. Why not just start with a clean slate if your debt is overwhelmingly high?
http://debts-to-wealth.com/category/Credit-Counseling.html
Debt consolidation or not?
I am having a hard time choosing between solution to my debt problem. i have around $8000 in credit card debts right now. All of them are in collection agencies now and I have no means in paying all of them and all are delinquent too. I've been thinking of doing a debt program. I've been looking around and have seen debt consolidation programs, debt settlement programs, consumer credit counseling, credit counseling agencies and debt management plan... and I have a feeling there are more I don't know of. My question is which one would be the best option. By now I know my credit is bad and I have nothing to put into collateral. I'm not really comfortable in doing anything online because I want to see and talk to someone face to face. What are the fees involved in the programs? Do you have to pay them monthly too? I just need all the information I can get right now.
Debt consolidation programs usually leave you worse off than you were originally. My suggestion would be to call your creditors and ask them if they could get you onto a payment plan that will work for you. Also, pick the card with the lowest rate and ask them if you could consolidate all of your debt to their card with the agreement that you will close other cards. They may do this, and then you will only have to make 1 payment per month and deal with 1 company when you're having trouble making payments. If this isn't an option, try to make your minimum payments while any extra money goes to the card with the highest interest rate.
Credit Card Debt?
I have some credit card debt from two cards and they have both been closed and turned to collections. I would like to put all the debt and make a payment plan or even make a payment plan with the individual companies so I can clean up my credit. How can I do that? And has anyone ever had a similar experience? And would it be better to contact the collection agencies themselves to make a payment plan or should I use Consumer Credit Counseling Services Debt Management Plan? I owe about 3,000 between two credit cards but I am a college student with limited income?
Debt in collections...Need advice?
Ok I have 8000 in collections. Way over 180 days past due. I am concerned with my future and my credit report, in making a decision to resolve my problem. What will I benefit more. Settling for less than owed with the collections agency? Or, going into a consumer credit counseling debt management program?
Not all of the credit services agencies are scams. I'm currently in a debt management program, through MMI/CCCS and I don't regret it at all. My creditors are getting paid and I'm not getting harrassed by them at work and at home.
When I first enrolled earlier this year I had a total of roughly $17k in debt with several different creditors. I know I could have made arrangements with the creditors on my own. I chose not to because of work. I work 7-5 and don't get home in time to call customer service. Couldn't call from work because personal use of the company phone is grounds for immediate termination. If you must make a personal call you can only use your personal cell preferably from inside your car because they don't want people hanging around outside the building talking on cell phones.
For credit counseling to set you up in a debt management program I think you need to be at least $10k in debt. You should be able to make a settlement arrangement with your creditor. Call to get it set up and then send them an agreement based on that conversation in writing.
Creditor taking furniture, etc. from your home?
I had a man from a debt management (credit counseling agency) tell me that if a credit card company took you to court and got a judgement, then they could take things out of your home if you bought them with the credit card such as furniture, appliances, etc.
Was he just telling me this to try and get me to sign up with his company or is this true, can a CC company really do this?
I have a CC debt, but no household furniture was bought on it.
No, this was not the collection agency that told me this. it was a man from a credit counseling agency. I was talking with them to try and see if I could get help with the debt.
If it is Unsecured debt, which credit cards are, they can not do that. Even if you bought the furniture on the credit card in question they could not take it back. If you read the terms and conditions of the card there will be a line to the effect that "They do not maintain a security interest on the items purchased"
They are not allowed to threaten you with actions they can not legally take or have no intention of taking. If you are in the US this may be a violation of the Fair Credit Reporting Act. It really depends on exactly what he said. If it is you can actually file suit against them for damages, I beleive the current amount is $1000 per violation.
Now they can take still take you to court. But the court may allow them to garnish your wages or try to attach your bank account but they can not take your physical property for unsecured debt.
If he calls again, get his name, phone number, the time and date he called. Let him know that that it sounds like a violation of the FCRA and if they call again you will pursue legal action.
I am trying to get auto financing on a used car to replace one with maintenance issues. My husband and I are?
in credit counseling and are in a debt management program. We are making payments on time with no problems and have a reference letter from the counseling agency to present to financing departments. We have been turned down for financing by our credit union because of the DMP. Will a dealer be more likely to look at a DMP as a positive? Will we be able to get financed at a dealer w/o the "buy here pay here" ?
If you have to pay high interest and can afford the payments, make sure you get a fixed rate open end which means you can pay down the loan without being penalized. If you both work, perhaps you can increase your federal tax to 5% each so you'll always get a refund each year.
agency counseling credit debt management - News
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'Become your own bank' to get out of debt - ENC Today 'Become your own bank' to get out of debt Weathers, who has been in the credit counseling business for 22 years, said he offers debt consolidation, debt management, debt resolution and debt |
Daily Herald - Daily Herald
KNSSDaily Herald You don't walk in the door of a counseling agency and walk back out debt-free a few minutes later. In exchange for the reduction in what you owe, The Military Family Network
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Debt management workshop to be held in city next week - The Northern Light Debt management workshop to be held in city next week Fifteen public workshops will be held under a partnership between the provincial government and Credit Counselling Services of Atlantic Canada Inc. (CCSAC), |
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Young adults with bad credit, and how to help them - CreditCards.com Young adults with bad credit, and how to help them He might check with his local library or Consumer Credit Counseling Agency to find out what is available in his area or check for online courses at |
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Recession pushes many to seek extra paycheck - Atlanta Journal Constitution Recession pushes many to seek extra paycheck Credit Counseling of Greater Washington, a division of Money Management International, which is the nation’s largest nonprofit debt counseling agency. |
