PostHeaderIcon Debt Consolidation Companies, Pros and Cons?


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I need to know if doing a debt consolidation through a company is worth it. My debt is just a little over $5000.00. Any one who has done it or understands it a it better than me.
And does it help your credit

4 Responses to “Debt Consolidation Companies, Pros and Cons?”

  • Judy says:

    It does not help you credit.
    In fact it can harm it.
    A new loan is considered new credit for the first 6 months.
    Plus, an inquiry will ding your score.

    Many companies will require collateral or exeptional good credit for this loan.
    Chances are you may not qualify.

    Two options:
    Get a good book on Credit and Debt Repair
    from your library or bookstore
    All the tricks are there on how to deal with debt – you’ll become a pro.

    National Foundation for Credit Councelling
    Is the only federally approved non-profit agency to help you.
    NFCC.org
    Go to the site – call the 800 number and make an appointment with a local office.
    They will help you at no cost.
    BUT…. they only do what the books clearly have on them.

    Another option:
    Tackle the debt yourself.
    Attack the highest interest card and pay it down to at least 30% of it’s available credit limit.
    Then go with the second highest interest – and so on.
    Passing that 30% usage of your credit limit is when your scores starts reducing.
    That’s why they say it is best for scores to use your credit cards wisely.
    Pay in full each month.
    /

  • CatDad says:

    Debt consolidation firms have you deliberately default on your credit cards to settle for less. When you use such a firm, the monthly payment you make is going towards their settlement fees and to build a settlement account. Their fees are taken out first. Your credit cards will not be paid and will go into complete default during this process, which ruins your credit rating. This is deliberate so that they can attempt settlements for 50%.

    People signing up with debt settlement firms often have the mistaken impression that their creditors will gladly work with such companies..or that they are obligated to accept settlements. You can never predict how your creditors will respond..they might settle at 50%…or they might serve you a summons, take you to court…and if they win, you could be looking at wage garnishment. If the process fails you can end up in a much worse financial situation.

    If you’re struggling with credit card debt and you’ve exhausted all self help options, then you may want to try entering into a debt management plan through a non profit credit counseling firm like CCCS. They can negotiate reduced payments and interest but NOT settlements. Referral at: http://www.nfcc.org -

  • xoxoxo says:

    I heard they are a lot of scammers. Go to Las Vegas, and be a cocktail waitress for a month you’ll make more than your debt.

  • My Take on It says:

    All CON!
    Do NOT go with a debt consolidation or repair company. All they will do is take your money and leave you worse off than before you began. That 5k you owe… LOL It will turn into 8k or more by the time these guys are done with you.

    If you need help getting your credit in order, contact a local chapter of http://www.nfcc.org. They are a non profit organization that isn’t going to play games with your creditors at your expense.

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