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kahlua716
3 Girls for Me!
Member since 8/07 12475 total posts
Name:
Keri
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Debt consolidation- help- another ??? at the bottom of the pg.
DH has some old debt that needs to be repaid ASAP. We do not have the money to pay it all in full. He contacted a debt consolidation service that wants an "initial design fee" of $150 and monthly payments of $25 (that do not go to creditors.)
Is this normal for debt consolidation? He would wind up paying $1500 to this company by the time the debt is paid off.
Can anyone reccommend another way to do this?
Message edited 2/13/2008 12:27:23 PM.
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Posted 2/12/08 2:35 PM  |
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Long Island Weddings
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LIMOMx2
...
Member since 5/05 24989 total posts
Name:
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Re: Debt consolidation- help
I would def stay away from going to one of them if you can.
It really really ruins your credit. I heard for at least 5 yrs.
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| Posted 2/12/08 2:37 PM |
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kahlua716
3 Girls for Me!
Member since 8/07 12475 total posts
Name:
Keri
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Re: Debt consolidation- help
I went through care one credit for my own debt about 4 years ago. MY credit score has already improved significantly. I also have a lease in my name that helped alot. I have credit cards now that I pay off right away to help and I have one that carries a small balance (from buying furniture and a computer) but will be paid off in the next 2 months.
I don't think they are all bad- but it shouldn't take 4 years to pay off $5000! and I don't want to pay $7000 when he doesn't even owe that much.
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| Posted 2/12/08 2:45 PM |
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SweetTooth
I'm a tired mommy!
Member since 12/05 20105 total posts
Name:
Lauren
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Re: Debt consolidation- help
Can you get a personal loan? I did that a few years back.
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| Posted 2/12/08 2:53 PM |
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Kara
Now Zagat Rated!
Member since 3/07 13217 total posts
Name:
They call me "Tater Salad"
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Re: Debt consolidation- help
Posted by kahlua716
I don't think they are all bad- but it shouldn't take 4 years to pay off $5000! and I don't want to pay $7000 when he doesn't even owe that much.
No, it shouldn't take 4 years... Why can't he just pay off his debt to the CC companies without going through a debt consolidation agency? (I think the vast majority of them are a bad idea...) After several months of no purchases and bigger payments, he can call the company and ask them to reduce his interest rate.
Is his credit good enough to get a 0-interest card for that $5k and transfer the balance? At least then, for 6 months to a year, there wouldn't be any interest payments.
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| Posted 2/12/08 2:55 PM |
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kahlua716
3 Girls for Me!
Member since 8/07 12475 total posts
Name:
Keri
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Re: Debt consolidation- help
Posted by Kara
Posted by kahlua716
I don't think they are all bad- but it shouldn't take 4 years to pay off $5000! and I don't want to pay $7000 when he doesn't even owe that much.
No, it shouldn't take 4 years... Why can't he just pay off his debt to the CC companies without going through a debt consolidation agency? (I think the vast majority of them are a bad idea...) After several months of no purchases and bigger payments, he can call the company and ask them to reduce his interest rate.
Is his credit good enough to get a 0-interest card for that $5k and transfer the balance? At least then, for 6 months to a year, there wouldn't be any interest payments.
No. Thats the problem. All the accounts have been in collections forever.
Do you think he could work out payment plans with the collections agencies?
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| Posted 2/12/08 2:58 PM |
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JenniferEver
The Disney Lady
Member since 5/05 18163 total posts
Name:
Jennifer
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Re: Debt consolidation- help
Posted by kahlua716
Posted by Kara
Posted by kahlua716
I don't think they are all bad- but it shouldn't take 4 years to pay off $5000! and I don't want to pay $7000 when he doesn't even owe that much.
No, it shouldn't take 4 years... Why can't he just pay off his debt to the CC companies without going through a debt consolidation agency? (I think the vast majority of them are a bad idea...) After several months of no purchases and bigger payments, he can call the company and ask them to reduce his interest rate.
Is his credit good enough to get a 0-interest card for that $5k and transfer the balance? At least then, for 6 months to a year, there wouldn't be any interest payments.
No. Thats the problem. All the accounts have been in collections forever.
Do you think he could work out payment plans with the collections agencies?
Yes, they will most likely work with you You may veen be able to reduce what he owes.
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| Posted 2/12/08 2:59 PM |
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kahlua716
3 Girls for Me!
Member since 8/07 12475 total posts
Name:
Keri
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Re: Debt consolidation- help
Posted by JenniferEver
Posted by kahlua716
Posted by Kara
Posted by kahlua716
I don't think they are all bad- but it shouldn't take 4 years to pay off $5000! and I don't want to pay $7000 when he doesn't even owe that much.
No, it shouldn't take 4 years... Why can't he just pay off his debt to the CC companies without going through a debt consolidation agency? (I think the vast majority of them are a bad idea...) After several months of no purchases and bigger payments, he can call the company and ask them to reduce his interest rate.
Is his credit good enough to get a 0-interest card for that $5k and transfer the balance? At least then, for 6 months to a year, there wouldn't be any interest payments.
No. Thats the problem. All the accounts have been in collections forever.
Do you think he could work out payment plans with the collections agencies?
Yes, they will most likely work with you You may veen be able to reduce what he owes.
That would be great.
Once our CD matures I will have to take the money out of there to pay it off...but that's still 4 months away. And I don't want to leave it sitting until then.
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| Posted 2/12/08 3:02 PM |
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JenniferEver
The Disney Lady
Member since 5/05 18163 total posts
Name:
Jennifer
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Re: Debt consolidation- help
Posted by kahlua716
Posted by JenniferEver
Posted by kahlua716
Posted by Kara
Posted by kahlua716
I don't think they are all bad- but it shouldn't take 4 years to pay off $5000! and I don't want to pay $7000 when he doesn't even owe that much.
No, it shouldn't take 4 years... Why can't he just pay off his debt to the CC companies without going through a debt consolidation agency? (I think the vast majority of them are a bad idea...) After several months of no purchases and bigger payments, he can call the company and ask them to reduce his interest rate.
Is his credit good enough to get a 0-interest card for that $5k and transfer the balance? At least then, for 6 months to a year, there wouldn't be any interest payments.
No. Thats the problem. All the accounts have been in collections forever.
Do you think he could work out payment plans with the collections agencies?
Yes, they will most likely work with you You may veen be able to reduce what he owes.
That would be great.
Once our CD matures I will have to take the money out of there to pay it off...but that's still 4 months away. And I don't want to leave it sitting until then.
My parents had a lot of CC debt. I called each compay and said "if I pay X now, what can we work out for the remaining" and most people were very happy to get some small amount now (if you can swing it) and arrange a plan or even reduce some of it. It goes on your credit report, but so do months of collections.
ETA: Esp if you give them a dat 4 months away when you will be able to pay a good chunk/all of it, they will work with you.
Message edited 2/12/2008 3:04:46 PM.
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| Posted 2/12/08 3:04 PM |
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Kara
Now Zagat Rated!
Member since 3/07 13217 total posts
Name:
They call me "Tater Salad"
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Re: Debt consolidation- help
Posted by kahlua716
Posted by Kara
Posted by kahlua716
I don't think they are all bad- but it shouldn't take 4 years to pay off $5000! and I don't want to pay $7000 when he doesn't even owe that much.
No, it shouldn't take 4 years... Why can't he just pay off his debt to the CC companies without going through a debt consolidation agency? (I think the vast majority of them are a bad idea...) After several months of no purchases and bigger payments, he can call the company and ask them to reduce his interest rate.
Is his credit good enough to get a 0-interest card for that $5k and transfer the balance? At least then, for 6 months to a year, there wouldn't be any interest payments.
No. Thats the problem. All the accounts have been in collections forever.
Do you think he could work out payment plans with the collections agencies?
Absolutely!
HOWEVER -- and many people don't realize you can do this -- ask them if you can set up a payment plan in exchange for them changing his credit history to say "paying or paid as agreed" or something like that. They don't have to agree to that, but they might. It will look better than the alternative.
You can even try to go to the CC company first to see if you can work it out with them -- rather than having to work with the collections agency. Some CC companies will work with you, while others will say "it's out of our hands since it went to collections." Depends on the company.
BTW, whether you use a debt consolidation service or not, after the debt's paid, only time will improve his score. It'll take a while, but it will happen!
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| Posted 2/12/08 3:04 PM |
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lullabella
LIF Adult
Member since 5/05 2246 total posts
Name:
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Re: Debt consolidation- help
Please be very careful these places can be very shaddy. I would contact the credit cards yourself to negotiate a repayment plan.
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| Posted 2/12/08 4:04 PM |
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njbound07
LIF Adolescent
Member since 4/07 799 total posts
Name:
pimpette
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Re: Debt consolidation- help
to my understanding, it is better to pay off the full amount vs. asking to pay a "settlement amt". It'll reflect on your credit as such. This was something that I did years ago. then 4 years after paying the settlement amt. it still reflected as such which had a negative impact on my score. I spoke to Experian & they advised me to go and pay the old debt in full.
E.g. if my total debt balance was $600 and the collection agency said we'll take off $140 so that I would pay $460 & that's what I did.. but then after a few years I went back & paid the $140 and it helped my score trremendously. I would just work out a payment plan with them. Every paycheck send them a set dollar amount.
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| Posted 2/12/08 4:37 PM |
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bklyngirl
COULD THIS BE MY YEAR??
Member since 6/05 15758 total posts
Name:
Gail
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Re: Debt consolidation- help
Posted by 5ofClubs
I would def stay away from going to one of them if you can.
It really really ruins your credit. I heard for at least 5 yrs.
i went through green path. it doesn't ruin your credit
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| Posted 2/12/08 8:32 PM |
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Shroggie
Don't Worry...Be Happy
Member since 5/06 6261 total posts
Name:
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Re: Debt consolidation- help
Do you belong to a Credit Union?
I work for a credit union, and we refer our members to a great company, free to our members. FM me if you're interested.
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| Posted 2/12/08 8:45 PM |
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ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
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Re: Debt consolidation- help
Posted by njbound07
to my understanding, it is better to pay off the full amount vs. asking to pay a "settlement amt". It'll reflect on your credit as such. This was something that I did years ago. then 4 years after paying the settlement amt. it still reflected as such which had a negative impact on my score. I spoke to Experian & they advised me to go and pay the old debt in full.
E.g. if my total debt balance was $600 and the collection agency said we'll take off $140 so that I would pay $460 & that's what I did.. but then after a few years I went back & paid the $140 and it helped my score trremendously. I would just work out a payment plan with them. Every paycheck send them a set dollar amount.
Actually... the best way to do this is to settle an amount with the collection agency.
If they agree to settle for an amount... tell them you are only paying them if they send you a letter IN WRITING saying that in receipt of the settled payment they will remove every single negative mark on your credit report related to this debt. Get it in writing and you are golden. Do not send any collection agency a DIME unless you get this letter. Make sure you also send out a DV letter to them as well to protect yourself (DV info below).
If they still report a partial payment that means the judgement is still on there and it wasn't removed. If you have it in writing that they were supposed to remove it, sue and win an easy lawsuit.
As far as those "debt relief" companies go... I wouldn't trust them ESPECIALLY if they ask for money up front. Do a google search on every one you are looking at to see if they are scam artists or not.
You are better off tackling each one of your debts individually with each of the collection agencies. Send out standard "debt validation" letters (certified with return receipt) to every collection agency you have debt which, which will prolong the process. If they can't validate your debt in 30 days in writing after you send out the DV letter, you don't have to pay them (regardless if its a real debt or not!).
Also check out creditboards.com - lots of useful information there!
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| Posted 2/12/08 11:41 PM |
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jellybean78
:)
Member since 8/06 13103 total posts
Name:
Mommy
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Re: Debt consolidation- help
Posted by ave1024
Posted by njbound07
to my understanding, it is better to pay off the full amount vs. asking to pay a "settlement amt". It'll reflect on your credit as such. This was something that I did years ago. then 4 years after paying the settlement amt. it still reflected as such which had a negative impact on my score. I spoke to Experian & they advised me to go and pay the old debt in full.
E.g. if my total debt balance was $600 and the collection agency said we'll take off $140 so that I would pay $460 & that's what I did.. but then after a few years I went back & paid the $140 and it helped my score trremendously. I would just work out a payment plan with them. Every paycheck send them a set dollar amount.
Actually... the best way to do this is to settle an amount with the collection agency.
If they agree to settle for an amount... tell them you are only paying them if they send you a letter IN WRITING saying that in receipt of the settled payment they will remove every single negative mark on your credit report related to this debt. Get it in writing and you are golden. Do not send any collection agency a DIME unless you get this letter. Make sure you also send out a DV letter to them as well to protect yourself (DV info below).
If they still report a partial payment that means the judgement is still on there and it wasn't removed. If you have it in writing that they were supposed to remove it, sue and win an easy lawsuit.
As far as those "debt relief" companies go... I wouldn't trust them ESPECIALLY if they ask for money up front. Do a google search on every one you are looking at to see if they are scam artists or not.
You are better off tackling each one of your debts individually with each of the collection agencies. Send out standard "debt validation" letters (certified with return receipt) to every collection agency you have debt which, which will prolong the process. If they can't validate your debt in 30 days in writing after you send out the DV letter, you don't have to pay them (regardless if its a real debt or not!).
Also check out creditboards.com - lots of useful information there!
ITA agree with this. First off go to creditboards.com and read read read. Collection agencies are usually sold the debt which already has been written off by the Original Creditor. e.g. If you had an Amex bill that was $5K and went over a certain amount of time...Amex wrote off teh amount then sold it to a collection agency for alot less. Before you deal with any collection agency read up and make sure any deal you do with them is in writing and sent certified mail return receipt. Make sure that if you do pay the collection they agree to wipe off any notation of the collection on all 3 credit reporting agencies also called pay for delete. Good Luck!
ETA: I would stay away from any credit consolidation company. They charge you for something you can do on your own with a little leg work and free info.
Message edited 2/13/2008 1:00:50 AM.
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| Posted 2/13/08 12:59 AM |
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alisha
LIF Adult
Member since 3/07 1199 total posts
Name:
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Re: Debt consolidation- help
If you have good credit, maybe you could get a credit card with a low APR balance transfer offer and transfer the debt.
The downside to this is that the card will be on your name, which I guess means the debt will be on your name. But since he is your DH, this may not matter to you. And it will help him start repairing his credit score sooner rather than later.
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| Posted 2/13/08 9:35 AM |
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kahlua716
3 Girls for Me!
Member since 8/07 12475 total posts
Name:
Keri
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Re: Debt consolidation- help
Thanks everyone! This information is all so helpful!
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| Posted 2/13/08 10:12 AM |
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IrishMom77
Brothers!!
Member since 8/05 3498 total posts
Name:
Roseann
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Re: Debt consolidation- help
just be careful
that happened to my DH and they took out tax refund that year without us knowing
We never got our refund and I called the IRS and they said a debt collection agency had the money. They can apparently do that. Sieze the money that you have coming to you. They can also freeze your bank accounts, so be careful
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| Posted 2/13/08 10:16 AM |
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ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
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Re: Debt consolidation- help
Posted by Tigger77
just be careful
that happened to my DH and they took out tax refund that year without us knowing
We never got our refund and I called the IRS and they said a debt collection agency had the money. They can apparently do that. Sieze the money that you have coming to you. They can also freeze your bank accounts, so be careful
That sounds highly illegal. The only way I can see this happen is if he didn't follow the process correctly.
Get those debt validation letters out! Collectors HATE to see DV letters because that raises the red flag for them. A DV letter shows the collection agency that #1 you know the fair credit collecting laws and #2 you know what you are doing.
I once disputed a $2500 charge on my credit card that the bank found in my favor. Low and behold 18 months later I get a collection notice demanding payment in 7 days or else they will take "action". Merchants can still take you to collections over disputed credit charges (I am sure some people don't know that).
LOL I laughed at this (and at them). Sent in the DV letter. Didn't hear from them in 30 days. Now I don't have to pay.  If they decide to mark my credit report, thats a $1000 violation against them (PLUS any damages from my credit report being marked) that I can easily sue them and win in court.
And if they decide to sell this debt to another collection agency, I automatically don't have to pay them because all I have to do is show collection agency #2 in writing the certified return receipt of my DV letter from CA #1 and show that its an invalid debt.
I love beating these people at their own game!
Message edited 2/13/2008 11:07:01 AM.
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| Posted 2/13/08 11:05 AM |
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IrishMom77
Brothers!!
Member since 8/05 3498 total posts
Name:
Roseann
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Re: Debt consolidation- help
Posted by ave1024
Posted by Tigger77
just be careful
that happened to my DH and they took out tax refund that year without us knowing
We never got our refund and I called the IRS and they said a debt collection agency had the money. They can apparently do that. Sieze the money that you have coming to you. They can also freeze your bank accounts, so be careful
That sounds highly illegal. The only way I can see this happen is if he didn't follow the process correctly.
Get those debt validation letters out! Collectors HATE to see DV letters because that raises the red flag for them. A DV letter shows the collection agency that #1 you know the fair credit collecting laws and #2 you know what you are doing.
I once disputed a $2500 charge on my credit card that the bank found in my favor. Low and behold 18 months later I get a collection notice demanding payment in 7 days or else they will take "action". Merchants can still take you to collections over disputed credit charges (I am sure some people don't know that).
LOL I laughed at this (and at them). Sent in the DV letter. Didn't hear from them in 30 days. Now I don't have to pay. If they decide to mark my credit report, thats a $1000 violation against them (PLUS any damages from my credit report being marked) that I can easily sue them and win in court.
And if they decide to sell this debt to another collection agency, I automatically don't have to pay them because all I have to do is show collection agency #2 in writing the certified return receipt of my DV letter from CA #1 and show that its an invalid debt.
I love beating these people at their own game!
Its not illegal
Dh had cards that went into default payments, etc. The balances were send to a collection agency/law firm
They can freeze your assets, etc for failure to pay. The IRS said it was legal for them to do it. So did my FIL who is an accountant. They can take any government/federal funds you have to pay the money you owe them. They can even garinsh your pay checks if they want
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| Posted 2/13/08 11:32 AM |
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ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
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Re: Debt consolidation- help
Posted by Tigger77
Its not illegal
Dh had cards that went into default payments, etc. The balances were send to a collection agency/law firm
They can freeze your assets, etc for failure to pay. The IRS said it was legal for them to do it. So did my FIL who is an accountant. They can take any government/federal funds you have to pay the money you owe them. They can even garinsh your pay checks if they want
It is illegal if you take the necessary steps to demand validation of the debt! If you demand to see validation, they can't do ANYTHING until they do this.
If you do not take the necessary steps to properly fight the debt, then yes they can do this.
I would read over the Fair Debt Collections Practices Act. If you fight the debt properly, then they can't do this... at least not right away.
And any wrong move they make in the process, if they word any letters incorrectly, or if they threaten to garnish your wages in a letter, then thats a violation of the FDCPA and you can sue THEM and collect on this!
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| Posted 2/13/08 12:00 PM |
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ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
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Re: Debt consolidation- help
Plus a lot of the times if you properly fight the debt or show them that you know the law, (depending on the size f the debt) they will usually just leave you alone.
Collection agencies have one goal: To scare people into paying them QUICKLY and EASILY
If you fight them, a lot of times they will simply mark your case as uncollectable because they know getting money out of you will take much longer and would require a lot more work on their part.
Depending on the size of the debt, it may just not be cost effective for them to pursue it. Collection agencies buy debt for cents on the dollar. They aren't taking that big of a hit if they don't collect.
But if you don't fight it, then you will be easy pickings to them and when they DO garnish wages, they would have the right to do so by law.
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| Posted 2/13/08 12:23 PM |
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IrishMom77
Brothers!!
Member since 8/05 3498 total posts
Name:
Roseann
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Re: Debt consolidation- help
Posted by ave1024
Posted by Tigger77
Its not illegal
Dh had cards that went into default payments, etc. The balances were send to a collection agency/law firm
They can freeze your assets, etc for failure to pay. The IRS said it was legal for them to do it. So did my FIL who is an accountant. They can take any government/federal funds you have to pay the money you owe them. They can even garinsh your pay checks if they want
It is illegal if you take the necessary steps to demand validation of the debt! If you demand to see validation, they can't do ANYTHING until they do this.
If you do not take the necessary steps to properly fight the debt, then yes they can do this.
I would read over the Fair Debt Collections Practices Act. If you fight the debt properly, then they can't do this... at least not right away.
And any wrong move they make in the process, if they word any letters incorrectly, or if they threaten to garnish your wages in a letter, then thats a violation of the FDCPA and you can sue THEM and collect on this!
It WAS DH's debt though lol
He would just use his credit cards and when he got the bill each month he would just throw it on the floor
He was VERY bad with finances - which is funny since he works in a bank
He is much better now
But basically he just ignored the bills for prob years and they wanted their money
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| Posted 2/13/08 12:25 PM |
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kahlua716
3 Girls for Me!
Member since 8/07 12475 total posts
Name:
Keri
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Re: Debt consolidation- help
If the collections agency doesn't validate the debt what exactly happens on your credit report.
I have a friend who works for the IRS and she said that if a debt is cancelled or deleted, you could be responsible for paying taxes on it (and the interest) because technically it's income seeing as you didn't have to pay.
from her email:
The thing with the "deleting" of credit, is that - as far as I know - it's a cancellation of debt, and Will will end up with I believe they are 1099-C's to put on next year's tax return. The cancellation of the debt counts as income because technically, since you never paid for what you bought, that debt is counted as income. (Which means, anything that is cancelled with come to him on a 1099-C, he'll have to put it on his/your tax return, and then you'll be paying TAX on it.)
Anyone know anything about this?!
Also- I was just reading that the collections agencies (in their initial attempt to collect the debt) give you 30 days to ask for verification after the 30 days they assume the debt is valid. In DH's case, this 30 days has past a few times over- can I still go ahead with the debt verification letters?
Message edited 2/13/2008 12:38:53 PM.
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| Posted 2/13/08 12:25 PM |
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