Consumer debt consolidation services provide debtors with counseling on financial and debt management as well as credit education. They seek to teach individuals how to better manage their money, live a debt-free life and avoid bankruptcy. Bankruptcy chapter seven and debt settlement are two methods to eliminate accumulated debt. You will reduce your overall debt and do so with a quick repayment. Contrary to debt settlement, though, in bankruptcy you appeal to the judge to oversee the liquidation of your assets to pay your creditors. Usually, the debtor is left with nothing other than any exempt property which leaves nothing available for the creditors. If you have been considering bankruptcy to settle your outstanding debt loans, you may want to consider debt reduction consolidation services instead. Such services can also help you avoid the embarrassment that comes along with filing bankruptcy. Set the goal of eliminating your unsecured debt and look into consumer credit counseling and similar services, including debt consolidation services. Be sure to choose the right company, though, by first educating yourself on how debt or credit consolidation agencies work.
Debt consolidation agencies are set up with the goal in mind of reducing your debt, total monthly payments and interest rate. Their main task is to consolidate your debts and monthly bills into one monthly payment, convincing the creditors to accept the new terms. These agencies work with the creditors to ensure that your monthly payment required is decreased by nearly sixty percent. The consolidation agencies will evaluate your current debt and financial situation and develop an appropriate plan. Obviously, you may be paying a small fee for the services the agencies provide. You may also be required to sign a statement or letter confirming your identification, your total debt amount, the names of your creditors and your intention to payoff the debt incurred.
Debt consolidation agencies and consumer counseling services try to help you through your financial situation, and are not only interested in making money. They will also help repair your credit through various credit repair services, including the elimination of the negative scores on your credit report due to late credit payments. This can sustain your credit worthiness by working with the creditors to show you as a bill-paying consumer.
All you have to do is contact a debt consolidation agency or consumer counseling organization to improve your financial situation and financial future, settle debt and repair your credit.
Watch the video related to credit consolidation
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Help answer the question about credit consolidation
Are credit consolidation companies a good idea for ppl with bad credit?If a person has bad credit are they better off going with a debt consolidation company or does it look worse on your credit report?
I would suggest you try to find a local place where you can see someone face-to-face (as opposed to over the phone). A good, reputable non-profit is CCCS or Consumer Credit Counseling Services. They will set up an appointment with you and ask you to bring in a bunch of information: your last few pay stubs, all your bills and statements, a copy of your credit report (if you have one handy, if not, they can pull one), etc.
They will go over everything with you and let you know what they can do to help. They are not able to consolidate all bad debts, so be aware of that up front. They are nationally recognized, so they are able to negotiate pay offs for you as well as lower your interest rates on credit cards and the like. They can even change the terms (like the monthly payment). After they contact all your creditors, they take into account your monthly income and come up with a figure that will not stretch your budget beyond what you can afford. They will ask you to make a monthly payment to them and then they will divy up the money to the proper people.
After a month or two, it will show up on your credit report that certain accounts are "in consolidation". That is not a bad thing per se. Creditors can at least see that you are taking responsibility.
CCCS might also ask that you make a small donation since they are a non-profit. They've been known to waive the fee if you absolutely cannot afford it. One important thing to remember is that you cannot default on your agreement. It looks really bad credit-wise if you do…so just make sure you're ready to embark on the repayment. The length of time really depends on the severity of the debt (which looks fairly bad) and how much your monthly payments are.
I hope that helps and I wish you the best!
http://www.debtadvice.org/ has an online lookup for legitimate credit counselors. Look for an organization that will look at your situation in detail, instead of producing a cookie-cutter plan.
The new bankruptcy laws have made it more difficult to qualify for Chapter 7, or the kind that releases you from all of your debts. Here's an article with more details: http://www.nolo.com/article.cfm/objectId/B0B66870-4C52-4303-919B10B9611D3EF9/213/161/176/ART/ A bankruptcy stays on your credit reports for seven years, so it should be your last resort. See what a credit counselor says first.
Good luck!
There are many different forms of consolidation and each of them have varying effects on your credit rating.
Debt Consolidation Loan – Many people think first of a debt consolidation loan when seeking debt consolidation help. Usually, this is reserved for home owners with equity in their homes that can be tapped to payoff other debts. This option typically means a second home loan (or home equity line of credit) or refinancing your primary mortgage. In a debt consolidation loan, you exchange one or more loans for another. The most frequent form is taking out a mortgage loan, which carries a lower interest rate and is tax deductible, to pay off high interest rate credit card debt. There is no credit rating impact with this kind of consolidation.
Credit Counseling – Credit counseling, or signing up for a debt management plan ("DMP"), is a very common form of debt consolidation. There are many companies offering online credit counseling, which is essentially a way to make one payment directly to the credit counseling agency, which then distributes that payment to your creditors. Most times, a credit counseling agency will be able to lower your monthly payments by getting interest rate concessions from your lenders or creditors. While most credit counseling programs do not impact your FICO score, being enrolled in a credit counseling debt management plan DOES show up on your credit report… and, unfortunately, many lenders look at enrollment in credit counseling akin to filing for Chapter 13 Bankruptcy – or using a third party to re-organize your debts. This is typically a good form of debt consolidation help if you have lots of high interest credit card debt and just want a lower monthly payment.
Debt Settlement and Debt Negotiation – Debt settlement, also called debt negotiation, is a newer form of debt consolidation help that cuts your total debt, sometimes over 50%, with lower monthly payments. Debt settlement programs typically run around three years – so they are a short programs with low monthly payments that can save you the most money while avoiding bankruptcy. It is important to keep in mind, however, that during the life of your debt settlement program, you are NOT paying your creditors. This means that a debt settlement solution of debt consolidation will negatively impact your credit rating. Your credit rating will not be good, at a minimum, for the term of your debt settlement program. However, debt settlement is usually the fastest and cheapest way to debt freedom, with a low monthly payment, while avoiding Bankruptcy. The trade-off here is a negative credit rating versus saving money.
Net-net: While there are many forms of debt consolidation help, many people with good to perfect credit who own homes should look into debt consolidation loans, while consumers with high credit card debt and poor credit may want to explore debt settlement or debt negotiation.
Debt consolidation is an option, and you should look into it. Just be careful about WHAT you're getting into. Some plans, because of their higher APR rates get you into more trouble than you were.
Also, some lenders look poorly upon it later on. Some institutions believe that it really is a black mark. It will depend upon the types of deals that your particular company or lender work out, and of course, your own individual circumstance. For some with absolutely NO way out, debt consolidation is a welcome option.
Take a good hard look at all the options and plans offered, and don't let a single company pressure you into something you just can't do. Make sure that you're comfortable with the plan offered before you commit to it.
In any case, it doesn't hurt to investigate debt consolidation as an option. It doesn't cost you anything to find out more information about it.
If you want a place to start your investigating, there's information and listings for debt consolidation providers on the page listed below. You'll probably find something of use there:
http://axalda.info/debt-consolidation.html
Having those cards and never using them is not helping your credit score, just charge a small amount every month and pay it off in full, this will improve your credit score.
You can ESTIMATE your credit score for free at
http://www.myfico.com/FICOCreditScoreEst...
I would stay away from debt consolidation loans, because most people (not implying you) are not responsible enough to not max out those credit cards again, or get further in debt. If you do decide to do a loan, then make sure that the costs of the new, bundled loan will truly be less than what you're already paying various creditors. Many times because of current debt situation, you will not get lowest-available interest rate. Plus, when there is nothing to secure the loan (such as your home), expect the lender to bump up the rate.
http://www.bankrate.com/brm/news/cc/20031007a1.asp
On your additional details:
I am actually surprised that those two lenders have not closed the accounts that have not been used. On hurting your score, well no they do not IF you have had the cards for a long period of time, and if you close them than your score will fall because your debt to available credit ratio will rise.
On your defaulted credit cards, make every effort to pay those cards because if you do not and they get charge-off. and they will report on your credit report the charge-off, your credit score will take a HUGH hit, then they will sell the accounts to collection agencies.
The collection agencies will also report on your credit for a collection account, further lowering your credit score and both these accounts (as long as the original creditor is reporting charge-off with zero balance) will report on your credit report for 7 years.
These type of companies will in the long run cost you more then you know. As to Persels and Associates LLC, they are just a subsidiary of Care One Credit.
They make you pay funds into an escrow account first (minus their monthly fees) then inform your creditors that they would like to offer a settlement. They however wait forever to do so, once the creditor has waited long enough, they may take the offer. But remember this, no creditor is obligated to accepting their offer and could wait a few years and just before your state statutes of limitations runs out for bringing a civil suit to seek a judgment expires, they will hit you with a law suit.
Ask them to provide you with a monthly statement to see where you stand with your creditors.
As to your credit rating, well all of your credit reports have now been flagged as being in settlement which will affect your score in a very negative manner.
You might want to read about them from a person who filed a complaint at this following web site:
http://www.ripoffreport.com/reports/0/354/RipOff0354186.htm
(NOTE: this web site might take a while to download)
Here are some "warning signs" to look for
The company wants you to pay for credit repair services before they provide any services. Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the services they have promised.
The company doesn’t tell you your rights and what you can do for yourself for free.
The company recommends that you do not contact any of the three major national credit reporting companies directly.
The company tells you they can get rid of most or all the negative credit information in your credit report, even if that information is accurate and current.
The company suggests that you try to invent a “new” credit identity — and then, a new credit report — by applying for an Employer Identification Number to use instead of your Social Security number.
The company advises you to dispute all the information in your credit report, regardless of its accuracy or timeliness.
Other then this, I can not personaly state that they are not legitimate, but one should allways be wary. Remember, if it sounds to good to be true, then it isn't.
EDIT: NOT all links provided are SPAM, only those that lead to pay for services web site.
Hope this answer is of help to you
LEGAL DISCLAIMER: The answer provided here is intended for informational purposes only. It is not intended nor presumed to be legal counsel or professional legal advice
Well Bank Of America would probably the only ones willing to help you. Credit Unions only give loans to members and most of them check Chexsystems before approving you.
What keeps most people in debt is the fact that they keep spending more money than they make. They look at the "monthly payments" instead of the total debt loan that they are carrying. People need to stop spending now and concentrate on becoming debt free. Please do not consolidate or use a debt reduction company . It is not free, they will lower your payments by increasing the length of time until you are debt free, and you will take a hit on your credit score. Or they negotiate your debt down after telling you not to pay for awhile adding another hit to your credit score. If you want to buy a house "soon", it is better to get the debt paid off, not "consolidated". Consolidation does not change your amount of debt (except that your debt goes higher because of the fees they charge) so your debt to income ratio will not improve. Student loans are the only debt that can garnish your wages for non payment without taking you to court first. When you do buy a house, keep the payment around 25% of your take home income, 28% at the most and only get a fixed rate loan preferably for 15 years, 20 years at most. Many lenders are now selling 40 year loans as well as 30 year loans. Believe me, you do not want to be paying on your house for the next 30 years, 15 is enough. Most lending institutions will tell you that 33% or 35% is fine, but that is really hard to live with and you run the risk of becoming "house poor" and working just to feed the mortgage.
Just list the debts out on a piece of paper or a spreadsheet and follow the plan. If you work the plan, the plan will work for you.
A. Have a garage sale and sell anything that you no longer need or want.
B.Get a temporary part time job, if you have one, get another.
Here is a plan that can help you. If you work the plan, the plan will work for you:
1. Make a budget. Make the budget a week before you get paid. A budget is not a punishment! It is a tool which will free you from ever having to worry about money again. Put everything in your budget. Especially those annual, biannual, or quarterly bills like car registration, insurance, etc. Give every dollar you are going to bring home the name of where it is going. Add an "emergency fund" category to your budget for 25 dollars and save up until you have 1000-1250 dollars. Your emergency fund will help keep you from getting into new debt because of an emergency. If you can, set up a direct transfer to a savings account for your emergency fund. That way it moves automatically and you don't even have to worry about it. You must cut your spending and live on less than you make.
2.First get current on all of you debts and make no more late payments. Stop using your credit cards immediately. Do not take on any more debt. Credit cards are like quicksand only the death is much slower. Make a list of all of your debts in order of highest interest rate to lowest interest. Use cash only for your spending from now on.
3.Pay the minimum due on all of your debts and then put your extra money towards paying off the highest interest one first. After you get that one paid off, you put the money you were paying on debt #1 (the minimum payment and the extra payment) towards debt #2. That will pay debt #2 off faster. When that is paid off, you put all three payments towards card #3 and that one will be paid off pretty quickly. As an example:
To start :
Debt #1 (highest interest): minimum payment+ extra payment
Debt #2 (middle interest): minimum payment
Debt #3(lowest interest): minimum payment
Debt #1: paid off
Debt #2: minimum payment from Debt #1+ Minimum payment from Debt #2 +extra payment
Debt #3: minimum payment
Debt #1: paid off
Debt #2: paid off
Debt #3:Minimum payment from card #1+ minimum payment from Debt #2+ minimum payment from Debt #3+ extra payment.
That way, you will get them all paid off, on time, and pay the least interest. It will also help towards rebuilding your credit since you will no longer have any late payments. This works no matter how many different debts you may have.
4. After you get all of your debts paid off, add to your emergency fund until you have 6-12 months of income saved up. Put that emergency fund money into a liquid money market fund or into a Bank of America no-risk CD so that if you need the money you can take it out without penalty.
5a. When you have your emergency fund in place, add a category for "fun" to your budget. Save for a holiday, a vacation, a big screen, or dinners out, whatever goal you want. Remember to enjoy your life.
5b. When you have your emergency fund in place, start saving for your retirement. Join the 401(k) plan at work and contribute the maximum. Your employer probably matches at least part of your contribution so why give up free money? Open a Roth IRA and contribute the maximum on a monthly basis. If you start saving for your retirement now, you will probably retire a millionaire.
5c. When you have your emergency