Credit Card Debt Consolidation Services

[Maurice Bedard]

Many people are looking for help with credit card debt consolidation services and I wanted to let them know that there is FREE services available to you. You do not have to pay a lawyer or fly by night debt firm to help you.

Here is a list of services that I know offer free or lost cost assistance to consumers:

1. http://www.nfcc.org/index.cfm

Call 1-800-388-2227 to speak to a counselor near you. Para ayuda en Español Ilama al 1-800-682-9832.

Our Member Agencies provide individual, confidential counseling over the Internet.

Internet

• New Online Counseling Session
• Military and Overseas
• Returning Clients

NFCC Member Agencies are staffed by professional Certified Consumer Credit Counselors that provide online personal assistance to people who need help with stressful financial situations. Our certified counselors are people who care about you and your community.

2. http://www.moneymanagement.org/

Money Management International
9009 West Loop South, 7th Floor
Houston, TX 77096-1719
PHONE: 866.889.9347

[Martae007]

Thank you Moe for posting this! A much needed thread. We are all in this vicious cycle that doesn't seem to let up! The credit card industry systematically pulls ones credit, doesn't take into consideration that the consumer may very well be in the process of modifying home loan(s); sees the lates, raise the interest rate to 30% - now on a 5,000 balance the minimum payments are 285.00, if you only pay minimum then the interest fees sock you, the available credit is reduced and now we hit with an overlimit fee!

What does one do while in mod hell? I figured I'd at least maintain credit card payments while in process to keep the fico half-way decent, but with the interest rate so high .... well, I'm at my end. Thanks for letting me vent.....

[MamaBear911]

Glad to have a place to discuss yet ANOTHER area of financial stress!

Wondering if I could get a simple answer....what exactly do these companies do to help with debt? What are they able to do to make credit card debt more managable? I have gone over my finances with two places and they came up with payments that were MORE than we are paying now. My problem is monthly cash flow -I can't pay more...I have contacted the CC companies themselves and have gotten nowhere. We are paying HUGE interest rates on cards that have been closed on us. So, before I spend hours on the phone again...I was hoping you may give me some insight as to what can I expect them to do to help me? I guess what I'm asking is...is help actually available, or is it all a waste of time? I get myself all worked up!!
Thanks

[Martae007]

This answer was posted at a different location, but I hope it helps. As for me, I'm so disgusted with the whole matter, I decided not to pay the ones that raised the interest rates to 30% and closed me (this is what I'm doing, I don't suggest you do the same).

Here's the post:

the rules of the game are not what they used to be; and we didn't change them, the banks and financial institutions did. We had perfect credit for 40 years - NEVER made a payment late or missed one. Now the rules are that they don't care about that, they are going to raise your rates or increase your minimum payment from 2% to 5% no matter what. But if you stop paying they are all of a sudden willing to reduce your rate, lop off some of the principal, or accept a reduced amount as a settlement.

I don't like the new rules, but we don't get to make them. Your credit is going to take a hit whether now or later if you're in financial trouble, so my advice is to bite the bullet sooner than later. If you pay off your credit cards and then can't get a loan modification you could lose your house. I'd say stop paying the credit cards, turn down your phone, turn off your answering machine and when you're 90 days late start calling them and ask for help in reducing your interest rates, etc.

I hated doing it, but we are in a much better financial situation now then before. Although some say let them go to collection and you can settle for as little as 10 cents on the dollar I chose to negotiate with the credit cards and ended up reducing my overall debt by about 30% and what remains is mainly at 2% interest and most will be paid off in 5 years. I'm not trying to stiff anyone, just make my debt load manageable and keep us out of bankruptcy.

But the bottom line is they won't do anything to help you unless you stop paying them.

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Yesterday, 11:40 PM

[Maurice Bedard]

Martae007 - I am glad this helps and there needs to be more discussion on these non-home loan/ debt issues here on LoanSafe since many of you are experiencing other debt issues. Whatever you all do should be based on an educated decision from your own research and what you plan in the future. Just as you are doing.

TLuster - Negotiating on debt is much like negotiating a loan modification. It is not easy to get help on credit cards when you are not yet late or in distress. Just like a loan mod when you are current is extremely difficult, so is negotiating on unsecured debt. These non-profits act just like a housing counselor would and they counsel you on making decision and creating a plan. Some will negotiate and get you on settlement offer or reduce rate, some will teach you how.

This is the type of service someone would need when they cannot claim bankruptcy or simply walk away from the debt all together.

[calgirl67]

Just want to let everyone know that these "Debt consolidation" companies or the like are sponsored by the big banks and credit card companies and they ARE PAID COMMISSIONS ON THE BALANCES THEY RESOLVE. ie: The higher the "settled" balance the more $$ they get. It is not in their interest to get your CC debt settled for 10 or 20% they want to go for 50-70%.

This is now rumour or BS, we were told this when we filed BK and did our pre-filing credit counselling course. Opened our eyes big time.

[Martae007]

WHAT???? We are very lucky to have this web site. These individuals are getting commissions on top of the banksters raising the interest rate to 30%. Incredible.....

[calgirl67]

WHAT???? We are very lucky to have this web site. These individuals are getting commissions on top of the banksters raising the interest rate to 30%. Incredible.....

I had a typo in there - should read THIS IS NOT RUMOUR not "now"..

Yes why do you think they make profits in the billions?

I just filed Ch 7 and they all got NOTHING. Nada.. squat. Nobody is going to profit off MY MISERY.

[sofla]

My information regarding the big credit negotiating companies is that they actually negotiate to buy your debt (without telling you) and then negotiate with you to "settle" the debt for xx% which is obviously higher than what they purchased the debt for. You don't know about it bc you are making payments through them.

I don't want to believe this bc it seems like this would be a HUGE conflict of interest --

[Martae007]

Allow me to vent if I may,

I just got another letter from a credit card, I think the new term for these companies should be "cranksters" (creditor-banksters). Anywho, they reduced my limit yet again after never being late nor missing a payment! Most cases I've made double and triple payments.

Correct me if I'm wrong, if a credit card has a low limit matching your balance, doesn't that reduce the FICO? I've been told that the way to increase ones FICO is to pay down credit cards to show a high limit with a low balance. Now, if the cranksters are systematically chasing us down - reducing the limit each time we make a payment, are they not part of the problem of us having low FICO scores??????

[Maurice Bedard]

My understanding is that it is better to be at about 50-60% of your credit limit. They reward you for being in debt, but not to the max. I assume they figure that if you have multiple cards with very low balances, that the consumer is trying to raise their scores by playing the credit game.

When you analyze these things that deal with banks etc., you have to think like a banker. This will help you tremendously in playing the "game."

Our society is constructed around money, credit, debt and mass consumption. This is a science and we are the subjects of the experiment.

[Maurice Bedard]

Correct me if I'm wrong, if a credit card has a low limit matching your balance, doesn't that reduce the FICO? I've been told that the way to increase ones FICO is to pay down credit cards to show a high limit with a low balance. Now, if the cranksters are systematically chasing us down - reducing the limit each time we make a payment, are they not part of the problem of us having low FICO scores??????

They must have other information that another creditor has shared with them. Are you unemployed? If so, maybe they were tipped off or can easily find this out.

[pookey]

Allow me to vent if I may,

I just got another letter from a credit card, I think the new term for these companies should be "cranksters" (creditor-banksters). Anywho, they reduced my limit yet again after never being late nor missing a payment! Most cases I've made double and triple payments.

Correct me if I'm wrong, if a credit card has a low limit matching your balance, doesn't that reduce the FICO? I've been told that the way to increase ones FICO is to pay down credit cards to show a high limit with a low balance. Now, if the cranksters are systematically chasing us down - reducing the limit each time we make a payment, are they not part of the problem of us having low FICO scores??????

They've been doing this for about 2 years now...on one card from Citibank every time I paid $250 in principal I would get a reduction of credit notice for similar amount! They've even begun to reduce credit lines on business credit cards. And this when we'd never missed a payment nor even been late with a payment in over 40 years!! They want to reduce their credit exposure - our credit card limits were all way up there; remember when every other month they'd give us a bigger credit line?

And yes, it "should" affect FICO scores...but I watch mine constantly and in the 2 years of reducing credit limits it never made a change in my score. Then I started subscribing to some banking newsletters for the industry and there is FICO sponsoring all sorts of "help" and white papers for the banking industry to help them zero-in on the best ways to rip us off and target new people. As with everything in the financial world everyone is all tied up with everyone else. For some reason the banks didn't want credit scores affected by their credit line reductions, so the FICO model changed accordingly.

[Martae007]

Moe,

Thanks for your response. I'm self-employed, and I was at the 50-60% mark until the credit card companies started playing the "snatch" game. The only creditors that could have "tipped" them off are the Lender who have been dragging their feet, playing the "please resubmit your documents" game on three of my rentals. My other properties are not underwater and I am current.....

[Maurice Bedard]

My pleasure. I assume it was your servicer who reported this some way on your credit. It is like an alert to other creditors that you are in distress, may day, may day, pull in the lines. Remember with creditors, it is us against them.

[Martae007]

Thank you Moe for setting and keeping me straight! I just need to calm down and focus on the larger picture. ...

Pookey, thanks for sharing your thoughts! At this point, I'm starting to feel paranoid and dismayed. Thank you call for letting me vent, showing me reason, making sure I don't go too far off the deep end. I love you all!!!!!

I'm going to calm down before I have a stroke before I get my mods done and nobody will get paid!!!!

[daglo]

I lost my job and my husband took a huge decrease in his income. We had to use credit to keep up with our mortgage payments after being denied a mod for 2 years. To save our home, we had to decide what to pay.

We chose to pay our home.

I contacted all my creditors, Chase, and Citibank I told them our situation, and asked them to please help us to continue to pay them. I explained our situation about our job loss and income loss. NONE OF THEM WOULD WORK WITH ME!!! I had to pay less than the minimum (this is after having perfect credit and never being late for 35 years of marriage).

They raised our rates to 30% and lowered our credit limits. We couldn't believe this.

We still have not paid, some have been sold to credit recovery groups pretenting to be attornies on the phone. I offered to send all of them $50. a month, they refused. If I had more, I would gladly sent it to them.

I have not found another job. Our income is still reduced, but we have our home. Things happen. One place offered me "three low payments of $3,500 as a settlement". We laughed. If we had this, we would gladly pay. We eventually got a mod last year after not paying our credit cards for three months. This did not hurt our chances of getting a mod.

We explained our situation, and the bank listened and gave it to us. Now we have tried to get our second HELOC reduced, but One West won't budge. We might have to file Chapter 13 and have it stripped away. Can't believe they would let this happen rather than work with us to lower the payment.

[Martae007]

Daglo,

Congrats on saving your home! Your post was heartfelt, I truly understand and know that you are not alone. We all here feel ya!

[Maurice Bedard]

Like Martae007 said, we are here for ya! Unfortunately, creditors and banks cant be nice when someone is losing income and or jobs. The reason being is that they have to become debt recovery agents and get the most amount they can from you.

Being nice or reducing rates cost them time and money. More often than not, they would rather sell you account at a loss and move on because in their eyes you are an extreme risk, liability and money losing account.

I know this is tough Daglo, but do what is best for you and your husband. Maybe a Chapter 7 is in order if your income is that low. That way you can just wipe it all out with no payment plans.

We all have to learn from this and move on wiser.

[ml143333]

About ten years ago, I used a debt arbitration company called Family Debt Arbitration out of Candia, NH. Back then, it truly was arbitration. They did not settle any of my debts, but worked with different credit card companies to reduce interest, remove late fees, and in some cases reduce principal and payments. At that point, I had about $10-15k in credit card debt. They were able to negotiate my payments. I had a contract with them and with each credit card company and paid my payments for 5 years directly to FDA and they paid the credit card companies. All they asked was for a set-up fee and one extra payment at the end. Once I started in the program, everything was brought current.

Like I said, this was ten or so years ago so I don't know if they have changed strategies or not, but it is worth a look. I don't want to get in trouble by posting a website so if you want it, let me know and I guess I can e-mail it to you.

[Fred Esterly]

Credit counselor will help you determine the best way to approach your financial situation and provide you the best options for managing your debt.
They will assist in analyzing your current financial situation, providing personalized options based on your goals, and recommending the optimal debt management plan to achieve financial stability. The credit counseling solutions we provide offer our members long term financial success, as well as short term debt management and debt consolidation.

[pookey]

About ten years ago, I used a debt arbitration company called Family Debt Arbitration out of Candia, NH. Back then, it truly was arbitration. They did not settle any of my debts, but worked with different credit card companies to reduce interest, remove late fees, and in some cases reduce principal and payments. At that point, I had about $10-15k in credit card debt. They were able to negotiate my payments. I had a contract with them and with each credit card company and paid my payments for 5 years directly to FDA and they paid the credit card companies. All they asked was for a set-up fee and one extra payment at the end. Once I started in the program, everything was brought current.

Like I said, this was ten or so years ago so I don't know if they have changed strategies or not, but it is worth a look. I don't want to get in trouble by posting a website so if you want it, let me know and I guess I can e-mail it to you.

Back 10 years ago a credit counseling company may have been able to do something you personally couldn't get done, but not so in today's economy. I know for certain Citibank and Chase are sending pre-emptive letters to certain people (what criteria they are using I don't know) offering to settle debt for as little as 30%. Even without a letter just a phone call to the bank's customer service number will likely get you a settlement offer or at the least 5-year payoff at 1% or 2% interest. Even AMEX has programs - one was a small payment and no interest for 6 months, they may have others now.

I wouldn't spend the money for a credit counseling company until you have made the phone calls yourself. Now keep in mind either way you have to be at least 60-90 days late before they'll talk to anyone about making a deal.

[Sean Quinn]

It is important that people understand the difference between the terms "credit counseling", "debt settlement" aka "debt arbitration" and "debt consolidation" as they all have different meanings.

Debt Consolidation- This is the general term that can encompass any of the various programs/services available. It really refers to the actual industry. Debt consolidation is the process by which one will put all their debts together (and usually hires a company) to pay them off quicker than the rate the are currently going. Everything else below will describe one of the various ways to "consolidate debt"

Example: "Holy cow! I have 15 credit cards! I need to consolidate my debt.!"

Credit Counseling
A program offered through enrollment with a 501(c) 3 non profit credit counseling agency (like us), is a comprehensive approach that allows the consumer to pay down their unsecured debt with smaller payments, reduced interest rates. waived late fees and payments. In a typical credit counseling program clients will be educated on various aspects of household budgeting, how to avoid future credit problems and learn of other financial options available. In addition to the educational aspect of enrollment, clients will be enrolled into what is called a Debt Management Program (DMP). The DMP will get the debt paid off in a certain set time frame with an affordable payment every month.

Typical results are monthly payments reduced by 20-40%, interest rates reduced to about 50%, and waiving of late fees and other charges. The average client is debt free in about 5 years.

Example: A Discover card and a Chase card, both at $10k with interest rates at 30% will be paid off at 8%. You still pay the full balance (and then some for the added, albeit reduced interest)

Debt Settlement
Sometimes known as "debt arbitration, or more recently "Consumer Law" is a balance reduction program where the company will renegotiate your current financial obligations with your creditors for a significantly less amount then you currently owe. Your monthly payment is based upon your income and financial status. Through an effective debt settlement program you can expect to be debt free in months, not years, but your credit will take a hit during (and sometime after) the process.


Typical results will reduce your overall debt by 40-65%, as well as getting you into affordable monthly payments. The average client is debt free in 26 months.

Example: A Discover card with balance of $20k, will be paid off for about $10k.

[Sean Quinn]

Back 10 years ago a credit counseling company may have been able to do something you personally couldn't get done, but not so in today's economy. I know for certain Citibank and Chase are sending pre-emptive letters to certain people (what criteria they are using I don't know) offering to settle debt for as little as 30%. Even without a letter just a phone call to the bank's customer service number will likely get you a settlement offer or at the least 5-year payoff at 1% or 2% interest. Even AMEX has programs - one was a small payment and no interest for 6 months, they may have others now.

I wouldn't spend the money for a credit counseling company until you have made the phone calls yourself. Now keep in mind either way you have to be at least 60-90 days late before they'll talk to anyone about making a deal.

That is not true. You do NOT have to be late on your payments to enroll in credit counseling (or debt settlement).

Please be careful you do not give incorrect advice!


-12 years as director of a non prof agency

[pookey]

That is not true. You do NOT have to be late on your payments to enroll in credit counseling (or debt settlement).

Please be careful you do not give incorrect advice!


-12 years as director of a non prof agency

I was talking about the terms under which a bank or credit card company will deal directly with the debtor. I was told several times that, and I quote, "you aren't late enough for us to offer you any terms." I began before I was late on any payments and they practically laughed at me for asking for any terms or settlement when I was still current.

Maybe for some giving up control to an agency is the way to go, but it can be successfully done by the individual in this economic climate.