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Thread: What are some LEGITIMATE "debt consolidation" companies/services

  1. #1

    Question What are some LEGITIMATE "debt consolidation" companies/services

    I have family that has too much money (over $20k) spread over a few credit cards (and possibly other debt that I don't know about, besides a mortgage) and wants to make things easier for themselves. B/c they are both currently unemployed they're starting to feel the squeeze.

    They've been looking into debt consolidation companies and have found most of them to be scammy.

    So who/what is legit and what proof is there?



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  3. #2

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    Quote Originally Posted by emazur View Post
    I have family that has too much money (over $20k) spread over a few credit cards (and possibly other debt that I don't know about, besides a mortgage) and wants to make things easier for themselves. B/c they are both currently unemployed they're starting to feel the squeeze.

    They've been looking into debt consolidation companies and have found most of them to be scammy.

    So who/what is legit and what proof is there?


    I've heard they can work well. Finding one that doesn't feel scammy could be tough.

    How about the Better Business Bureau.

    http://www.bbb.org/us/Find-Business-Reviews/



    Have you looked into bankruptcy? I'm not sure if they qualify but it can get it erased and a new start to help them get back on their feet.

    http://www.uscourts.gov/FederalCourts/Bankruptcy.aspx

  4. #3

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    Theres very little in the way of real debt consolidation. Most are actually "credit counseling services" that actually destroy what credit you do have. Best bet is to go to a local credit union and ask about a debt consolidation loan. CUs are pretty open to these kinds of loans and usually at decent rates.
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    Quote Originally Posted by emazur View Post
    I have family that has too much money (over $20k) spread over a few credit cards (and possibly other debt that I don't know about, besides a mortgage) and wants to make things easier for themselves. B/c they are both currently unemployed they're starting to feel the squeeze.

    They've been looking into debt consolidation companies and have found most of them to be scammy.

    So who/what is legit and what proof is there?
    Really , 20k and a mortgage is not that bad , what they need are jobs that pay more than unemployment.

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    I would not consider any to be legit unless they can offer a low interest loan themselves to pay off the other stuff.

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    You can try to do it yourself and not pay tons of money to somebody else to do it for you.
    http://www.investopedia.com/financia...#axzz2JxbuNXb7
    It is no secret that consumer debt is a significant problem in the U.S. Its total stood at a staggering $2,400 billion in 2010, meaning that the average U.S. citizen was encumbered with around $7,800 worth of debt across a plethora of loans, credit cards and financing agreements. Although 2011 has seen a slight improvement and witnessed the rate of household income spent on debt services fall from 13% to 11%, the good citizens of America are still investing vast sums of money into outsourcing the management of their debt. However, the question is whether this is money well spent or simply a case of throwing good money after bad? (For related reading, see 7 Tips For The Do-It-Yourself Debt Manager.)

    TUTORIAL: Credit And Debt Management

    Debt Consolidation
    Debt consolidation is often presented as the answer to consumers' prayers, and something that can ease the burden of multiple debts and leave you with just a single monthly repayment to consider. While there are some merits to its purpose, it is a paid service that does not significantly reduce the level of your existing debt. While a debt consolidation company may negotiate with creditors to freeze or reduce interest payments there is no guarantee that they will be successful, and your monthly repayments to them will also include administration and service charges.

    Debt consolidation companies base their services around easing the consumer's stress when it comes to managing financial liability. However, they do not achieve this by employing any practice that you could not implement yourself if you put your mind to it. Calculating your levels of income and overall expenditure is a practice that would be a good habit to get into anyway, while negotiating with creditors over interest rates and monthly repayments is as simple as picking up a telephone and being honest about your financial predicament.

    Seek Out Free Advice
    Commercial debt management companies offer several paid services to consumers, which can include everything from consolidation loans to debt counseling and the management of existing liabilities. When it comes to seeking out relevant financial advice and taking control of your debts, however, a for-profit commercial organization is the very last place you should visit. There are a number of free debt advice services that can help you to address your creditors and create a viable management program.

    USA-debt.com is an example of a free and impartial online resource that responds to queries about your existing debts and assesses any debt consolidation programs you are already affiliated with. Resources like this even provide free online debt management and budgeting tools, so that you may approach your financial liabilities with a suitable level of legal knowledge and a plan of action to reduce them. By sourcing free and impartial advice, you will save yourself potentially thousands of dollars in the long term. (To learn more, check out Expert Tips For Cutting Credit Card Debt.)

    Becoming Debt Free Is One Thing, Remaining So Is Another
    The issue with debt consolidation and management solutions is that while they can shine like beacons in a financial haze, they are often costly and short-sighted solutions to what has become a huge cultural problem. Undertaking a debt consolidation loan simply opens another line of credit, which does little or nothing to tackle low household income or the spending habits that caused the issue in the first instance. The key to long-term debt resolution lies in your own self discipline and understanding of finances, and not the capacity to invest in short term solutions.

    Budgeting and creating a big picture of your monthly incomings and outgoings is a good place to start, and should help to reveal several key areas for improvement. Most debt starts with an imbalance between what you earn and what you spend, and bridging this gap involves having a disciplined attitude to expenditure and refraining from impulse buying. By paying attention to these fundamental principles of solvency and maintaining frank and honest communication with creditors, not only can your debt be reduced but you can also lay the foundations for best financial practice. (To learn more, read Budgeting Basics.)

    The Bottom Line
    Remember that debt management companies often promise the world, but at best they deliver a costly service that replicates many of the practices that you can do yourself for free. If you are unsure about how to tackle your debt liability, start by seeking free advice from a government based nonprofit organization. This is the first step towards reducing personal debt and changing your financial behavior, and learning the key skills required for staying in the black in 2012. (For related reading, see 3 Alternative Budgeting Styles: Which One Suits You?.)


    Read more: http://www.investopedia.com/financia...#ixzz2JxcGi9ra
    Start with trying to get rid of the highest interest rate item first (usually a credit card).
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  8. #7

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    I agree with zippy - most of this isnt rocket science.

    Take an honest look at your financials. List out every income and expense. Break down all your loans by the type and the rate youre paying. Step 1 is to pay down highest interest rates first. Talk to credit unions about consolidation loans and see what rates they are offering, if they are lower than your highest rates, then its a good thing.

    Figure out how to get more income, either through employment or selling off crap you dont need and how to reduce your expenses, by either limiting what you have like cell phones, cable bills, etc or by lowering the rates on outstanding debt.

    Finally - talk to your creditors, explain to them that you will not be able to pay and see if there is any plan you can work out. Many times this only works once youve fallen behind on payments and if you have they will talk about settling rather than selling you off to collections.

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  10. #9

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    Debt consolidation, unlike debt elimination or credit repair, is a legitimate business. So it shouldnt be hard to find some
    Last edited by Tpoints; 02-04-2013 at 05:32 PM.

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    Alternatives to Bankruptcy

    by Nicholas Ortiz, Boston Bankruptcy Attorney
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    Most people would like to avoid bankruptcy if they can. Sometimes alternatives are worth trying, but it pays to know the risks. A good bankruptcy lawyer never pushes someone into bankruptcy but, instead, lays out the options and lets the individual decide. Here’s a bit of information about commonly-tried bankruptcy alternatives.

    1. Debt consolidation: If you are able to get a loan to consolidate unsecured debt into another loan, it can make a difference if the new loan has a lower interest rate or longer re-payment term. This solution is one that makes sense for people who can almost pay all their debts, but are struggling a bit and want better repayment terms. One must understand the risks if unsecured debt is transformed to secured debt on your home as part of the consolidation. If something goes wrong with the new loan, the future consequences will be more severe, i.e., your home will be in jeopardy.

    2. Debt settlement:Once a debt goes into extended default, it can often be settled for less than the face amount–often much less. If a debt is deeply in default and has been purchased by a debt buyer, it is realistic to attempt to settle such a debt for between 30 to 60 percent of face value (sometimes less, sometimes more). However, there are a few traps for the unwary. Once debts have traveled into lengthy default, they have usually ballooned to a much larger face amount (due to interest and fees) than they were when you stopped making charges. So, 50 percent of a future amount may sometimes look a lot like 100 percent of a current debt balance, but it depends on the circumstances and time periods involved. There are also important tax consequences to debt forgiveness. Moreover, in trying this approach, one needs to be ready to deal with the sometimes annoying contacts from debt collectors for an extended time period. However, debt settlement can sometimes make sense for people who have (or can save) enough cash to make realistic offers to debt buyers. This is something that you can usually do yourself. Beware of companies who specialize in this work: most are scammers.

    More:

    http://www.bankruptcylawnetwork.com/...-bankruptcy-2/

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    Default Debt Settlement Companies Come Under Increasing Scrutiny from Regulators

    The lead article in the Economy section of the June 18, 2010 New York Times offers revealing insight into the practices of “debt settlement” companies. Debt settlement companies position themselves as alternatives to bankruptcy, suggesting that they have insight into “secrets that the credit card companies don’t want you to know.” In fact, the business models used by debt settlement vendors is fairly simple. As the Times article explains:

    In the typical arrangement, the companies direct consumers to set up special accounts and stock them with monthly deposits while skipping their credit card payments. Once balances reach sufficient size, negotiators strike lump-sum settlements with credit card companies that can cut debts in half. The programs generally last two to three years.

    The problem, however is this:

    http://www.bankruptcylawnetwork.com/...om-regulators/

  14. #13

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    Quote Originally Posted by bobbyw24 View Post
    ...
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    Don't do Debt CONsolidation (as dave ramsey says). Pay your debts off one by one and call up your creditors to see if they will settle the amount owed for a cash discount.

  16. #15

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    www.Lexingtonlaw.com

    I used this when I cared about my credit and debt, they get you started by sending letters to creditors to find and clean up errors. It worked pretty well until I learned to do it all myself.

  17. #16

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    No one is going to give them a consolidation because they're unemployed. Loaning money to people who make $0 is dangerous as hell.

    Now would be a good time to start assessing options if they're feeling the pinch. I'd start carefully considering the odds of finding a job soon. And also the idea that the endgame might be bankruptcy.

    There isn't nearly enough information here, and I wouldn't want you to post it publicly, but sit down with your family and tally what they owe each month, the interest rates on each debt, and which are really necessities (home) and which can be told to go to hell (store credit cards, or something).

  18. #17

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    Quote Originally Posted by jclay2 View Post
    Don't do Debt CONsolidation (as dave ramsey says). Pay your debts off one by one and call up your creditors to see if they will settle the amount owed for a cash discount.
    Dave Ramsey is a moron. This will never work. In the cases that it will (like an old collections problem from years ago) this strategy just risks ruining your credit by extending the life of a bad mark (paying on it makes it fresh again, meaning it'll sit on your credit report for 7 more years) or a lawsuit for a judgment against you (because they know you have money now).

    Dave Ramsey doesn't care about credit reports or scores, again because he's an idiot, so he can fling around this advice without considering any of the disadvantages. Listen to him at your own risk.

  19. #18

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    Quote Originally Posted by Jordan View Post
    Dave Ramsey is a moron. This will never work. In the cases that it will (like an old collections problem from years ago) this strategy just risks ruining your credit by extending the life of a bad mark (paying on it makes it fresh again, meaning it'll sit on your credit report for 7 more years) or a lawsuit for a judgment against you (because they know you have money now).

    Dave Ramsey doesn't care about credit reports or scores, again because he's an idiot, so he can fling around this advice without considering any of the disadvantages. Listen to him at your own risk.
    His system works. I have seen people use his methods and be successful in turning around extremely dysfunctional lifestyles and massive debts. You can keep your bs credit score. High Credit Score = "I am a good little debt slave".

  20. #19

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    Quote Originally Posted by jclay2 View Post
    His system works. I have seen people use his methods and be successful in turning around extremely dysfunctional lifestyles and massive debts. You can keep your bs credit score. High Credit Score = "I am a good little debt slave".
    Typewriters work. I have seen people use typewriters to turn around poor handwriting and compose excellent legible papers and letters. You can keep your BS word processor.

    Dave's system works like typewriters work: poorly and slowly.

    Credit scores are used to find good employees and price insurance rates. There's more to it than Dave's simpleton perspective that you're repeating. P.S. You don't need debt to have a high credit score.





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