Need general thoughts on “credit help”/coaching organizations?
I am considering working with a "credit help" company [sort of like Consumer Credit Counseling--I think] which is supposed to help lower payments, cut interest, etc. Currently my credit is pretty good but it will all soon be in jeopardy since I cannot afford the minimum payments much longer due to loss of a good-paying job.
I am wondering about the pros and cons of doing this. What is the best thing I can do in my unfortunate situation? I don’t desire to declare bankruptcy–and am skeptical as to whether or not I can even do that. I just don’t see how I can mitigate this situation–protect my credit and pay off the credit card debt–as my income has taken a sharp hit. General thoughts and/or personal experiences are most appreciated. Thank you.
September 13th, 2009 at 5:24 am
First of all I help people with this a lot so you’re not alone in your situation. I would suggest that you contact a company called Springboard. http://credit.org. They charge $50.00 initial fee and then $10.00 a month to process it.
The good side of doing this is that they will significantly lower your monthly payments and your interest rates. You will be able to pay back your debts, you just won’t have to pay the outrageous interest rates and fees.
The down side is that your credit score will be effect. Not because you are seeking credit counseling, but because they close your cards. While it is totally unfair any time you cancel a credit card, it has a negative impact on your credit score.
I have a free eBook on my website called The 5 Secrets to Financial Freedom that you may want to check out. It comes in a pdf file and is emailed out to you immediately. It will help with this.
September 13th, 2009 at 5:24 am
I cannot imagine that any private firm could do any better than CCCS…which is either free or charges a token fee…
Contact your local Red Cross for a referral to the local Consumer Credit Counseling Services (CCCS) in your area. They can negotiate much lower payments and interest rates. They DO NOT negotiate settlements.
They will require you to stop using all credit and to cut up your cards. Your credit report will be updated to "enrolled in debt management." This does not damage your credit, but it may make it impossible to obtain new credit while you are enrolled in their program….so don’t use this service if you anticipate applying for a new apartment, car loan or mortgage anytime soon, as you would probably be denied while you’re enrolled in the CCCS debt management program…. Otherwise, it can be a very good way to deal with your debt.
Please note that CCCS cannot perform miracles in situations where there is an overwhelming level of debt relative to your income/assets.
———————–
DO NOT use any firm that promises to settle your debt at 50%…these firms deliberately let your accounts default/charge-off to put them into a position to negotiate settlements…This ruins your credit rating and your creditors have no obligation to accept settlements from these firms.
September 13th, 2009 at 5:24 am
They will work out a budget for you and determine how much you should pay them into one monthly payment. The con is you can’t get additional credit or sometimes they claim they pay, but eventually most got ripped off by the organization. I say go for it and try to find one that doesn’t charge a highly maintenance fee and that it is a non-profit.Also, double check that all your creditors agreed to this program.
September 13th, 2009 at 5:24 am
Talk to your creditors ASAP.
Tell them what’s going on, and negotiate as much as you can. You may be able to negotiate extensions, lower interest rates, lower payments, and similar solutions. If you get in arrears, you can always offer to pay whatever you can pay, and you can ask that they report you "Paid as agreed" which will certainly help restore your credit. Things you might want to mention are that while you are trying to avoid bankruptcy, their actions will weigh on this decision; and that you would like to pay them in full but are not able to AT THIS TIME.
Of course I’m no lawyer or credit counselor, but rumor has it that most of the things they can do can be done by you, sparing you the fees that the counselors must charge. Anybody can offer to settle. Anybody can ask for lower interest rates or suspension of fees.
Good luck in your job hunt ( I assume that you are looking for another good job?) and your credit boondoggle.