How do those debt consolidation 1-800 nubmer work?
Question:
anyone know if this really work or is a scam or what kinda fees or what exactly do they do!?
Answer:
I used to be a financial adviser. Here's how those programs work; Let's say you have $10,000 worth of debt. Your MINIMUM monthly payments due monthly would be about $350. The first thing they do is change the billing account address and phone numbers on all your accounts to their info. Then they have you pay the consolidation company $450 a month. Then the conso company quits paying your bills. After 3-4 months you go to collection on all your debts. You don't hear about it though, because all the phone calls and letters are going to the conso company. You can see this happening on your credit report though. The debt will say; "In credit management" on the report. After a couple more months they talk the collection agency into accepting a partial payment. So instead of owing $10,000, now you owe $4,000, with no due date. You continue to pay $450 until the collection agencies are satisfied, and the debt companies % based fee is collected. That's it! Now you have no debt, and awful credit! (Worth it for a lot of people, because if your that bad with your debts, your credit is going to get wrecked eventually. You minus well save some money in the act.)
I think it's a scam. There's no shortcut way to get our of debt. Just cut your lifestyle, and start by paying off the debt with the lowest balance. Then work your way up to the higher debts.
I have been in finance for over 23 yrs now and They are not good. Even the Consumer credit charges you now. I know it even looks worse then a banko on your record sometimes to different companies. I learned how to teach people for free how to get rid of their debt the same way and how to repair your credit.. My 19 yr old daughter and her husband but got in bad with Credit Cards 12 of them to be honest. I just called all of them and stopped all fees it was that easy. Now we have decided to keep 2 of them and close the rest and they are doing great. I would find a family or friend to help you cause sometimes it is so over welming. Your welcome to get advice from me anytime @ greenfrog775@hotmail.com. I will send you all you need to do it yourself.
Shari
There are several different credit programs advertised on the radio.
One is from lenders who offer loans, either unsecured or secured, to consolidate all of your debt into a single loan.
Another is from organizations that are funded by lenders. This groups, (e.g. Consumer Credit Counseling) negotiate repayment agreements with your creditors. You agree not to charge any more, and they reduce your interest rates and sometimes your principal. This has a negative impact on your credit rating.
Joshua
I'm going to use a scenario like one of your previous responses had, but this one is simple and realistic. Let's say you have $10,000 in unsecured debt, you pay the debt settlement company 15% or so =$1500. Then you settle for 50% on that $10,000 =$5000...So now you are up to $6500. But wait.More than likely a 1099-C is going to be filed with the IRS because your settlement relieved you of over $600. So now, Uncle Sam wants his cut...Let's say you are in a 25% tax bracket, so that would equal $1250 you own the IRS in taxes...So when it's all said and done, your credit is shot and you didn't save much money.
$5000- Settle your debt
$1500- Debt settlement company fee
$1250- IRS
$7750- TOTAL (And you have settled debts on your credit report for about 7 years).
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