Debt management?

Question

Has anyone of you ever went throhg a debt management company to consolodate your credit card debt? What was the result and what company do you recommend? I am going to go through with it but I need some good recommondations of companies that worked for you. I have about 10k in credit card debt. (Yes...I was very irresponsible!)

Answer 1

the "inspector detector" is full of **** ! i NEVER use cc but my ex manage to run up my cc up to 8k !! i am very smart financially but not so much with men, lol... anyhow i managed to get it all consolidated on one card with a fixed rate of 2.99 for the life of the loan, that puts my monthy cc. payment at 150.00 a month, which is afforable and i will have in paid off in less then 4 years.  i was lucky to find this great offer (i did it on my own).... as far as an agency.. i would recommend A NON PROFIT goverment one.. maybe check with your bank sometimes they will give out 10k personnal loans with low interest rates or maybe let you pay over a larger scale of time.. the only problem i see here is because it was YOU that made the bad decisions .. you really must also work on yourself and spending out side of your means or else you'll continue down the same path and be in the same boat or worse later down the line..

Answer 2

Myth: Debt consolidation saves interest, and you have one smaller payment.

Truth: Debt consolidation is dangerous because you treat only the symptom.

Debt consolidation is nothing more than a "con" because you think you've done something about the debt problem. The debt is still there, as are the habits that caused it - you just moved it! You can't borrow your way out of debt. You can't get out of a hole by digging out the bottom.  True debt help is not quick or easy.

Larry Burkett, noted financial author, says debt is not the problem; it is the symptom. I feel debt is the symptom of overspending and undersaving. Certified counselors will not recommend debt consolidation for a client. Why? Because debt consolidation doesn't work.

Debt Consolidation Statistics

A friend of mine works for a debt consolidation firm whose internal statistics estimate that 78% of the time, after someone consolidates his credit card debt, the debt grows back. Why? He still doesn't have a game plan to either pay cash or not buy at all. He also hasn't saved for "unexpected events" which will also become debt.

Debt consolidation seems appealing because there is a lower interest rate on some of the debt and a lower payment. However, in almost every case, the lower payment exists not because the rate is actually lower but because the term is extended. If you stay in debt longer, you get a lower payment, BUT if you stay in debt longer, you pay the lender more, which is why they are in the debt consolidation business.

Debt Consolidation Example

For example, let's say you have $30,000 in unsecured debt, including a 2-year loan for $10,000 at 12%, and a 4-year loan for $20,000 at 10%. Your monthly payment on the $10,000 loan is $517 and $583 on the $20,000 loan, for a total payment of $1,100 per month. The debt consolidation company tells you they have been able to lower your payment to $640 per month and your interest rate to 9% by negotiating with your creditors and rolling the loans together into one. Sounds great, doesn't it? Who wouldn't want to pay $460 less per month in payments?  

But they don't tell you that it will now take you 6 years to pay off the loan.  This may not sound that bad to you at first unless you realize how much more you will actually pay in additional payments. You will now pay $46,080 to pay off the new loan vs. $40,392 for the original loans, even with the lower interest rate of 9%. This means you paid $5,688 more for the "lower payment". Not such a good deal after all. This example shows you why they are in the business - because they make money off of you.

The Real Way to Get Out of Debt

The answer is not the interest rate; the answer is a Total Money Makeover. http://www.daveramsey.com/ The way you get out of debt is by changing your habits. You need to commit to getting on a written game plan and sticking to it. Get an extra job and start paying off the debt. Live on less than you make. It is not rocket science, but it is emotional, which is why most people need help getting through it from someone like Dave Ramsey. Don't try debt consolidation!

I've been in your shoes, and I know your scared, you should be.  Your not alone, I paid of $13,000 in debt using Dave Ramsey's system.  It's not easy and it's not magic but it does work!  I am now on track to retire at age 52 with a nest egg that my family and I can live off of with dignity.

Sound good?  It did to me.  Get fired up kid your life is about to change for the better, but it's entirely up to you!

Answer 3

you can try what i  did! it worked for me, i was in debt around 12k and with the credit secrets book i got out of debt and raised my credit score around 180 points.

Answer 4

Javier,

There's a good article at eHow on steps to take to begin tackling your debt.  Take a look at it:

http://www.ehow.com/how_2326032_avoid-es...

How to Stop Escalating Debt

It includes information on companies (both non-profit and for-profit) that can help you with debt consolidation and reduction.  

You can also look here for tips on earning some extra cash online:

http://www.ehow.com/how_2254361_money-in...

How to make money on the internet, scam-free

Lastly, here's an interesting alternative to conventional lending...getting a "social networking" loan from Virgin Money (from the same folks who run Virgin Airlines):

http://www.ehow.com/how_2310995_student-...

Social Loans from Virgin Money

Hope these help.

Answer 5

Hi Javier,

I actually own a full service debt /credit consultation business. We take care of many situations including yours.

my name is Aaron. Why dont you email me at [e-mail].

I have no problem giving a little bit of free advice.

Answer 6

i came close but realized i just could NOT afford 2 pay a flat rate every single mo. HOWEVER, U MAY wanna check out an advertsed website called feedthepig.org. the tips r that U pay yerself B4 any 1 else, & consider cutting up a credit card & tell a friend 2, also. U should ALSO put away parta yer paycheck every single payday. this should B done 1'st B4 paying any 1 else u owe. failure 2 do so will result in yer NOT B'n able 2 eat or yer neglecting yer immedi8 household's needs.