Debt Consolidation

[ChristopherPaul]

Can anyone recommend a debt consolidation that does not negatively affect credit score?

Right now using the equity in my home is not an option due to time issues.

 

[king of fools]

What's your goal? I've done a bit of study in general accounting, finances, credit clean-up, consolidation, etc. over the past year. U2U me.

 

[Pilgrim]

Originally posted by ChristopherPaul
Can anyone recommend a debt consolidation that does not negatively affect credit score?

Right now using the equity in my home is not an option due to time issues.

to CCCS and all similar set ups, which are basically an attempt at Chapter 13 bankruptcy without the court order. And these companies that say they will settle your debt for pennies on the dollar are even worse.

I'm thinking that the only kind of consolidation that won't affect your credit score is some kind of loan, be it secured or unsecured.

 

[Puritanhead]

"I'm thinking that the only kind of consolidation that won't affect your credit score is some kind of loan, be it secured or unsecured."

Actually-- that is not entirely true Chris... I used a consolidation service for a while, and I was still getting 0% APR transfer offers--

Frankly, they are not always the answer, though they eliminate late payments and save time... The consolidation service may negotiate better terms with your creditors. Just ask questions and check the Better Business Bureau -- and make sure it's not a rip-off.

 

[Pilgrim]

Originally posted by Puritanhead
"I'm thinking that the only kind of consolidation that won't affect your credit score is some kind of loan, be it secured or unsecured."

Actually-- that is not entirely true Chris... I used a consolidation service for a while, and I was still getting 0% APR transfer offers--

Frankly, they are not always the answer, though they eliminate late payments and save time... The consolidation service may negotiate better terms with your creditors. Just ask questions and check the Better Business Bureau -- and make sure it's not a rip-off.

The vast majority show on your credit report that the bills are being paid through a consolidator, although there may be exceptions. This is viewed by lenders (especially for large purchases) as being little better than Chapter 13.

The fact that someone receives credit card offers means little, other than that they have a credit score and there's a difference b/w "pre-approval" and actual approval. And many 0% transfer offers are deceptive anyway. Oftentimes, the 0% rate is only good for 6 months, and it's not uncommon to see the rate jacked up to 20% or more afterwards.

 

[blhowes]

Not talking about ChristopherPaul, but I wonder generally how things turn out for people who use debt consolidation companies. Often, I'd imagine, they try these companies as a last resort after they've accumulated considerable debt and have the creditors pounding on their door for payments. Bad spending habits that caused them to get into debt in the first place don't change when the consolidation companies pay off the debts and lower the person's payment amount. Are there safeguards that these companies put in place that would help the person not get further into debt? Do they just ask them to tear up there credit cards, don't take out any more loans, etc.? Just wondering.

 

[BobVigneault]

Debt consolidation doesn't save you anything. It does the very same thing you can do on your own and some of those consolidators charge you a fee so you will pay more. Here's the most efficient way to deal with debt.

1. Work out a budget, give every dollar you have coming in a name.
2. Cut up all your credit cards. Debt is your enemy.
3. List your debts from the smallest to the largest.
4. Pay the minimum amount to your debtors except for the one at the top of the list. Pay extra toward this one. Remember, minimum payments are calculated so that you never really pay off the debt, you just pay interest.
5. When your smallest debt is paid off this frees up money to be applied to the next debtor. Keep doing this, creating a snowball effect until all your debt is paid off.
6. When you debt is paid off start looking into investing the cash you know have in low risk mutuals. Make the money work for you.

After getting debt free, stay out of debt with the possible exception of your house. Debt is slavery, get out as soon as possible.

If, after writing out a budget plan, you think you have no extra money then find a temp part-time job (delivering pizza?). This will give you the amount of leverage you need to start you debt-snowball.

Try to find someone who is conducting a Dave Ramsey Financial Peace seminar or buy his book, The Total Money Makeover. Don't consolidate, it is a band-aid and not a solution.

If your debt is a credit card debt you can call the company and ask them to reduce your interest rate. This is one thing a debt consolidator does but you can do the very same things.
Always stay in touch with those you owe money to. If you can't pay the full amount of the minimum, call and work out something.

Whatever you do, pay your debt off, this is not your money. You have taken someone elses money and they want it back.

 

[ChristopherPaul]

Affecting the credit score is paramount for me. I have a very good credit rating and intend on keeping it that way. I do not have creditors seeking me out for payment nor do I miss payments or pay late, but I do have poor spending habits that need to improve. Since I am unable to payoff my credit cards, I do not want to be raped with outrageous interest rates. I wish to move them all over to one loan. From the feedback I am getting here, it appears I should seek a traditional loan and not a specific consolidation loan.

Originally posted by blhowes
Not talking about ChristopherPaul, but I wonder generally how things turn out for people who use debt consolidation companies. Often, I'd imagine, they try these companies as a last resort after they've accumulated considerable debt and have the creditors pounding on their door for payments. Bad spending habits that caused them to get into debt in the first place don't change when the consolidation companies pay off the debts and lower the person's payment amount. Are there safeguards that these companies put in place that would help the person not get further into debt? Do they just ask them to tear up there credit cards, don't take out any more loans, etc.? Just wondering.

I doubt it. This is their livelihood, they succeed the more people accumulate debt.

 

[Anton Bruckner]

Originally posted by BobVigneault
Debt consolidation doesn't save you anything. It does the very same thing you can do on your own and some of those consolidators charge you a fee so you will pay more. Here's the most efficient way to deal with debt.

1. Work out a budget, give every dollar you have coming in a name.
2. Cut up all your credit cards. Debt is your enemy.
3. List your debts from the smallest to the largest.
4. Pay the minimum amount to your debtors except for the one at the top of the list. Pay extra toward this one. Remember, minimum payments are calculated so that you never really pay off the debt, you just pay interest.
5. When your smallest debt is paid off this frees up money to be applied to the next debtor. Keep doing this, creating a snowball effect until all your debt is paid off.
6. When you debt is paid off start looking into investing the cash you know have in low risk mutuals. Make the money work for you.

After getting debt free, stay out of debt with the possible exception of your house. Debt is slavery, get out as soon as possible.

If, after writing out a budget plan, you think you have no extra money then find a temp part-time job (delivering pizza?). This will give you the amount of leverage you need to start you debt-snowball.

Try to find someone who is conducting a Dave Ramsey Financial Peace seminar or buy his book, The Total Money Makeover. Don't consolidate, it is a band-aid and not a solution.

If your debt is a credit card debt you can call the company and ask them to reduce your interest rate. This is one thing a debt consolidator does but you can do the very same things.
Always stay in touch with those you owe money to. If you can't pay the full amount of the minimum, call and work out something.

Whatever you do, pay your debt off, this is not your money. You have taken someone elses money and they want it back.

Funny that it was an Regional Vice President for Primerica that is a member of my Church taught me all of the above.

 

[Puritanhead]

Originally posted by Pilgrim
The vast majority show on your credit report that the bills are being paid through a consolidator, although there may be exceptions. This is viewed by lenders (especially for large purchases) as being little better than Chapter 13.

Well, if it we're true for me, I wouldn't have kept getting 0% balance transfer offers after I started using the consolidation service-- there are consolidation services that don't do that, because I had one. And I saw no record of a consolidation service on credit report, and frankly I just do NOT believe they make that a criteria for a credit report. All they want is your timely payments... that's it.

People can consolidate who want to avoid late payments and the perils that come with five or six payments a month-- even if they can afford their bills.

However, consolidation services that negotiate a reduced debt load are tantamount to restructuring-- and are like a charge-off or Chapter 13-- that's different. Whoever, pursues it-- should ask questions, and check on consolidators BBB affilation and reputation.

 

[CalsFarmer]

Originally posted by BobVigneault
Debt consolidation doesn't save you anything. It does the very same thing you can do on your own and some of those consolidators charge you a fee so you will pay more. Here's the most efficient way to deal with debt.

1. Work out a budget, give every dollar you have coming in a name.
2. Cut up all your credit cards. Debt is your enemy.
3. List your debts from the smallest to the largest.
4. Pay the minimum amount to your debtors except for the one at the top of the list. Pay extra toward this one. Remember, minimum payments are calculated so that you never really pay off the debt, you just pay interest.
5. When your smallest debt is paid off this frees up money to be applied to the next debtor. Keep doing this, creating a snowball effect until all your debt is paid off.
6. When you debt is paid off start looking into investing the cash you know have in low risk mutuals. Make the money work for you.

After getting debt free, stay out of debt with the possible exception of your house. Debt is slavery, get out as soon as possible.

If, after writing out a budget plan, you think you have no extra money then find a temp part-time job (delivering pizza?). This will give you the amount of leverage you need to start you debt-snowball.

Try to find someone who is conducting a Dave Ramsey Financial Peace seminar or buy his book, The Total Money Makeover. Don't consolidate, it is a band-aid and not a solution.

If your debt is a credit card debt you can call the company and ask them to reduce your interest rate. This is one thing a debt consolidator does but you can do the very same things.
Always stay in touch with those you owe money to. If you can't pay the full amount of the minimum, call and work out something.

Whatever you do, pay your debt off, this is not your money. You have taken someone elses money and they want it back.

Dave Ramseys "Total Money Makeover" book may be a good help for you , he gives really practical advice on money management and getting out of debt!

 

[Pilgrim]

Originally posted by Puritanhead

Originally posted by Pilgrim
The vast majority show on your credit report that the bills are being paid through a consolidator, although there may be exceptions. This is viewed by lenders (especially for large purchases) as being little better than Chapter 13.

Well, if it we're true for me, I wouldn't have kept getting 0% balance transfer offers after I started using the consolidation service-- there are consolidation services that don't do that, because I had one. And I saw no record of a consolidation service on credit report, and frankly I just do NOT believe they make that a criteria for a credit report. All they want is your timely payments... that's it.

People can consolidate who want to avoid late payments and the perils that come with five or six payments a month-- even if they can afford their bills.

However, consolidation services that negotiate a reduced debt load are tantamount to restructuring-- and are like a charge-off or Chapter 13-- that's different. Whoever, pursues it-- should ask questions, and check on consolidators BBB affilation and reputation.

This last paragraph is what I was referring to when talking about consolidation. I can think of no reason whatsover to get into such a scheme. (And this after much investigation, believe me!) And it's not uncommon for them to end up paying some of your debts late (even if you pay them on time), further damaging your credit. They are going to pay the creditors all at once, so some may be "on time" and some not, depending on the circumstances. This is a danger even with the most reputable outfits.

The only other kind of consolidation I know of would be a consolidation loan. No one is going to "consolidate" your debt for free. I agree with Bob. None of the "debt relief" agencies can anything beyond what you could do on your own. Again, the offers don't = actual approval. There have been times when I couldn't borrow a nickel when I got offers. And credit reports often lag a month or two behind.

It is up to the creditor how the payments are reported on your credit report. Some will put a statement on your report that the debt is being paid through a relief agency, etc., others don't. CCCS is probably the most reputable of these companies, and they can't guarantee that your credit report won't reflect the fact that the payments are being made through them since they can't control what the creditors report. If it wasn't reported on yours, then consider yourself fortunate. :bigsmile: