Credit Card Debt Consoliditation...

Sorry to hear this, Seahawk.

The only thing I could think of recommending was the website of a respected consumer advocate by the name of Clark Howard who has a daily radio show on an AM station here in Atlanta and who also makes regular appearances on one of the local news channels. He's a self-made millionaire and gives tips on anything consumer-related. Here's his page on credit card tips, etc:

http://clarkhoward.com/library/tips/credit_cards.html

Also, I always hear about the Consumer Credit Counseling Services on the radio. I googled it and here's what I found:

http://www.cccsintl.org/

Good luck!

Good luck in this one, Hawk. This is a much better route than filing for bankruptcy (which I had to do during my divorce). From what I understand, while you are still undergoing credit counseling, it shows up on your credit reports. However, after your finished, it's taken off. Much better than the 7 years bankruptcy will haunt you.

By any chance, have you gotten any credit card mailouts with and offer for 0% balance transfers?


I've been using them for the last 18 months or so, jumping from card to card every 6-12 months right before they expire, and I've been able to pay quite a chunk out of my consumer debt (credit cards, dept stores, furniture, etc) while paying zero interest.

As long as you keep track of when the zero/low interest period expires, you can beat them to the punch by signing up for a different offer.


Best of luck.

That's playing it kinda risky there, Gio.

The only advice I can offer is this: There's no such thing as Credit Repair. Remember this.

I'm staying away from Credit Cards for as long as possible. Long live check cards.

Credit counseling sounds like the best course for you....as to who you should use? Research, research, research. To start you might check out the the 3 big consumer credit reporting companies (EquiFax, TransUnion and Experian). Maybe it sounds kind of corny, but also check with the Better Business Bureau. I am sure one of them, if not all, could probably recommend someone reputable.

Just a comment in general, to support Social's comment, credit card counseling, while showing on your current record, at least shows credit companies that you are taking responsibility for your credit actions and working on being a better credit customer.

Best of luck to you!! Acknowledging the problem is the first step!

Depending upon the size of your debt, your current assets, whether or not you own a home, your family size, and your income you may seriously wish to consult a bankruptcy attorney in regards to the filing of a Chapter 7 or Chapter 13 bankruptcy. At the very least head to the library and take a look at a good at-home bankruptcy guide (I recommend the NOLO series).

I practiced law in the bankruptcy field briefly before moving on to other areas, and I often saw people who attempted to consolidate or refinance their debt needlessly. Often, people attempt merely to save their credit, without realizing that their credit is already so far gone that declaring bankruptcy actually makes them a better risk.

Sorry to hear that you're in a shit storm. Here's a link to a website for a guy that I listen to on the radio. He provides financial counseling packages and you may also find them in your local churches depending on where you are. If your are in fact getting that desperate, than it may be worth a shot. From listening to him on the radio, he tends to try to dissuade people from going to these credit repair businesses.

Maybe it'll help.

http://www.daveramsey.com/

It's a tough, tough road that you are on. I went through the exact same scenario 3.5 years ago. I started with the counseling, but quickly got out of it as I saw that it was actually hurting my credit even more. So, I went to a bank and was fortunate enough to be able to get a consumer loan to pay my credit off. I then paid the bank back the loan.

To this day, that counseling haunts me...obviously not as bad as what I was doing to get to the counseling, but it didn't help. They paid all of my payements late, and it was showing up on my reports. Plus the "pennies on the dollar" credit closures were the worst marks.

The credit game...it's a bitch. 3.5 years of rebuilding with $200 limit cards (they are both up to over $4K limits...zero balance of course!); 3.5 years of perfect credit...yet I can't finance a car.

Even though I've been perfect for 3.5 years, they don't care. My Beacon is much, much better (it bottomed out at 505...now it checks in at around 670..still crap, but much better), yet I still get turned down when I apply for something. I also love how you need good credit to finance a house or car, yet it hurts your credit when you do. Choice.

Good luck with what you do. I know how hard this is and how you feel right now. You will get through this, and just remember, it will be the most important learning experience of your life.

There are lots of scam Credit Consolidation places. You should call your local Better Business Bureau and get a list of the legit places.

This is the road I have chosen, and it's worked great for me. It's a lot of work, but worth it. CCCS is a non-profit--they're not one of these scams that just shift your debt to another creditor. When you sign up, you meet with a counselor, and he sits down with you to help you work out a realistic budget for paying it off. Unlike those debt consolidation companies, CCCS does not pay off all the debts and then charge you interest for the loan, they merely act as a middle-man between you and the banks. They will negotiate on your behalf and get your interest rates lowered. You send them a money order every month, and pay the debt off over time. The disadvantage is that you have to be able to come up with the entire lump sum at one point every month, rather than spreading it out over paychecks, and some of the stickier banks will knock your interest back up if you miss a payment.

When I started, I had $28,000 of credit card debt. Over a period of...let's see...it was 4 or 5 years...we paid it down to zero (last payment was in October). So, like I said, it's not an easy thing to do, but it's worth it.

Some other things to note: CCCS won't handle student loans, so I'm paying my wife's loan off separately now that CCCS is done. But seeing the progress made on one makes it seem much more doable (in the past, I'd actually looked on the student loan as something that would just allways be there). Also, obtain your credit report, find what bad things are on it (late payments, etc), and call the creditors, talk to a manager, and insist they take them off. You'd be surprised what can be accomplished by being insistent on the phone (even if you know you're wrong).

I would seriously consider filing for bankrupcy as a last resort.

Things I would do:

1. Go through your monthly expenses, list them out and trim the fat down to the nitty gritty, IE foot, water, electricity, and auto back and forth to work. I mean cut back to the bare minimum, get the cheapest of the cheap for food, etc. Don't go out, don't go out to eat, don't watch movies, don't watch TV, etc.

2. See if you can schedule in an extra job working at a carwash or something else were you can make some fast cash.

3. Ask parents for help.

4. Get rid of those high interest cards and get something with a lower rate, simply calling in and saying that you got an offer for a better rate will sometimes work and the credit card you are with will lower their rate.

5. Take what extra money you are making and would normally blow on movies and such and dump it all in on your lowest dept owed. Get that out of the way. Then work to the next one, etc.

6. Keep plugging away at it. You may have to sell any nice stuff you have to scrape together cash to get your dept taken care of.

----------------------

I know it sucks, but once you get off the dept bandwagon and start living dept free, life will be so much better.

I'm pretty much in the same boat as Rommel on this one, although I think I got out earlier than he did and it never impacted my credit rating all that much. My wife and I got with Consumer Credit Counseling while we were still in college, and they negotiate down your interest rates as much as possible on your cards, many of them actually down to 0%. The problem is that while you are paying every month (and the credit card companies are aware of what you're doing), they are under no obligation to not destroy your credit rating because you aren't actually paying the minimum monthly payment you'd previously agreed to. So even if the money is making it to them on time, they can be knocking your credit each and every month that it did not meet the minimum payment. Discover was the main culprit for us, so we called Discover to try and work out an arrangement where we actually paid above and beyond what CCC was sending them in order to insure we were meeting the monthly minimum. It was then that we were told that we could no longer do anything with our account, that everything had to go through CCC and that paying the additional amount was actually not even an option.
At that point we hit the credit union, got the consolidation loan and paid everything off with it, then began paying off the loan (which was actually significantly less each month than what we'd been handing CCC). The only catch was needing collateral, which I wouldn't have had if it weren't for the truck my folks had bought me when I was in college. It sucks putting your vehicle up as collateral like that, but it surely makes you pay attention to those payments. Good luck, and all I can tell you is that being debt free is worth the years of no extra money that are unfortunately in front of you.

I agree with some of billy's points. Sit down and take a look at your current spending. Buy cheaper products, I'm talking non name brand stuff that's just as good. My mother can buy about 4 to 6 times what I can for the same amount of money due to coupons, careful selections, and buying generic. Make sure that you don't buy anything that you don't need. These little steps can leave you with a good chunk leftover at months end for debt repayment.

I've never been in credit card debt myself, but my late father was. The advice above shouldn't really be considered as a proper way to repairing debt. I will take Gio's advice any day when it comes to a home theater setup, but doing this sounds like you could really be wading through some real deep shit if you are not careful.

The only bad thing about check cards is that if someone else gets their hands on it, much like a credit card, they can have a field day with it, but your bank account is immediately affected (like a debit card). If you have $5,000 in your bank account and it gets used up, your bank won't replace it. The only difference between check cards and debit cards is that a check card has the VISA/MASTERCARD logo, so it is more widely excepted.

In most cases, when your credit card is stolen, the owning bank will assume the debt if you report the card stolen in the appropriate time. I am not saying that everyone should have a credit card; just that I have heard that check cards are even worse, especially if you spend unwisely (i.e. weekly DVD purchases, etc).

According to the Clark Howard's page (the one I linked earlier), when you are deep in credit card debt, here's what he suggests:

• If you're in credit card trouble, stop using your credit cards.
• Pay off your debt 75 percent faster by making half your regular payment every 14 days.
• Stay away from offers that tempt you to buy merchandise with no money down, no payments and no interest until a later date.
• By paying the minimum payment on your credit cards, you never work off the balance. All you're doing is paying interest on the early debt you took on.
• When you get into financial trouble, create a pyramid of priorities. The most important thing to pay is your mortgage or rent. The next priority is your car loan, and the third is your utilities, which keep your house functioning. After that you pay your unsecured creditors - credit card and loan companies.
• If you need help, don't immediately file for bankruptcy. The best option is Consumer Credit Counseling, which can help you work out a debt repayment plan.

It would probably be helpful if Seahawk detailed the specifics of his situtation a bit more. His "massive debt problem" might only be four or five grand on one card where he's able to make the minimum payment and still pay his bills and live his life, but is intimidated by the overall balance. In that case then lifestyle-change recommendations would be more appropriate than suggesting bankrupcy, heh.

At the start of '02 I realized that I had tapped every line of credit available to me... several CCs, a 401k loan, a TV loan, loans against some investments my wife and I have, and on and on. There wasn't necessarily any big 'problem' other than pretty poor financial management, so we just quit buying stuff for a while. Nothing particularly drastic like cutting up CCs was necessary.

I had some friends who went to credit counseling and got their cards paid down through a combination of negotiation and reduced spending. They got rid of all their cards AND their checkbook, and forced themselves to use money orders to pay for everything. Just the little, somewhat artificial step of making it really inconvenient to spend money was apparently a big help (I can see how that'd work).

GL Seahawk, hope your problem is manageable.

This isn't very smart, actually. Get a card with a low balance, like $500 or something. At least once a month, buy groceries with it. Pay it off each month. Using credit wisely keeps your score high. Not using it at all keeps it low, as they have no history to base decisions on. Keep that in mind.

Or marry someone with an American Express card. Instant credit history.

I almost didn't get a loan simply because I had so little credit history, so Waco's advice is truth.

Eh, I'm in college right now and I don't need the temptation of a credit card. But it's something I'll keep in mind once I get out.

Credit cards, like drugs, are not a bad thing if you know how to control yourself. That little piece of plastic does not get you into trouble, you get you into trouble. Everyone's just gotta have to learn how to use credit wisely.

Yeah, that pretty much sums up why I do the 0% balance transfer deals. Back when I started, I already had $3,000+ in CC debt, $2,500 in furniture debt, and maybe another combined $1,500 or so spread among several department stores. God bless my wife, but she was a shopaholic. After a few months of getting 0% balance transfer offers (NOT 0% purchases, which are more commonly offered), I jumped on it because most of my dept store cards were charging over 20% interest, and the free interest period on our furniture was expiring the following month.


We applied for the card, and got approved for enough to close ALL of our dept store cards, most of which we've torn up already, and we closed our furniture accounts. To make it work though, we don't use the new credit card for anything. It kinda defeats the purpose of paying 0% interest, if I'm making purchases with my new card and accumulating more debt WITH interest, so to this day we haven't used that card.

Of course, getting a card like this requires enough willpower to not spend it to the limit. My wife and I made a concerted effort to reduce our debt, and it's working out great, even though we've slowed our payments down a bit now that we have a kid on the way.

I just think of it as a "consoldation account", and not as another spendable credit card I can use. I think my wife may have even torn up the card, since you really don't need to to make payments.

Absolutely right Gio. I just bought a place myself and have dropped many thousands in the last few weeks on furniture and other various crap. In anticipation of this, I got some 0% cards and will be trading my debt off between them until I get it paid off. It's important to review your situation and statements every month and know exactly where it's all going. It'll help you budget and cut down on the impulse items.

When I was a student I ran up tons of credit card debt. A financial advisor that I worked for told me that most credit card companies themselves are willing to work with you to make arrangements toward paying off your debt to them. For example, I sent one company a letter asking them if they would be willing to settle for 60% of the balance owed if they would accept this lump sum as a payment-in-full. (Which I told them I was scraping together from family members in an attempt to get out of debt.) And they accepted! So did 2 other CC companies. I know coming up with a lump sum may not be possible, but I didn't even know this was an option at the time and I thought I would pass the information on.

I also agree with the advice that suggested keeping one small card and making regular payments on it to keep your credit in good standing. Also, try to pay more than the minimum payment due each time you pay, or twice a month as someone else suggested. Good Luck!

For those of you who would like to save and not pay interest on half of your loan, here's an inside tip some know (it's how I've payed 2 cars that were originally scheduled to be payed off in 5 years down to half the time, this can also be applied to a mortage).

Scenario: car loan of $25,000 at at 2.9% apr over 5 years.

In most instances people that want to be done with their loans ASAP pay 2 months (or 3) at a time. That doesn't do them any good because the lending institution re-adjusts the ratio between the the payment you sent (one check that covers three months) and the principal/interest. So it's the same as paying three seperate months. No biggie. You still payed the interest.

What you do is this:

Call your lending institution and ask the for an amortization schedule. In it, you will find the schedule of your payments, and the breakdown of how much of your payment(s)s goes toward capital and interest.

Lets say you have 60 payments (1ST payment is due in March 15). When your first payment is due, send two (2) checks.

Check #1: pay the amount schedule for you first payment.

Check #2: pay the exact amount scheduled for you second payment. In the memo area write: PAY ON PRINCIPAL for April 15 payment

Therefore, the total amount on check #2 goes entirely to payment on principal, and by law, cannot be readjusted. If not, you can sue.

Soon, instead of paying 60 months of interest, you only pay 30 months at 2.9% interest and 30 interest free...and you're done quicker with your payments.

Do I make sense?

I believe many mortgage companies allow you to do this already very easily. I just got myself a mortgage and made the 1st payment. On the stub, I was given the option to pay additional towards principle. It's like they almost expect you to try and pay it off earlier. Like you said, it's a great idea.

I've been told that if you make just one to two additional mortgage payments a year for the first 10 years, you'll take 5 years off a 30 year mortgage. Not a bad way to save. Haven't done the math myself yet, but it does sound like good advice.

I only know of 2 banks that offer this service and one of them doesn't tell you about it.

heh, did I just happen to choose the most forthcoming bank in the country? I can why banks wouldn't want you to know though.

We got in over our heads from early on. We went to CCC and they said that they couldn't help us at all. We filed bankruptcy after we had to let the bank foreclose on our house. I had just gotten a new job in another part of the state and our house just never sold. It was the straw that broke our backs. Anyway, three years later we are back on track and should be able to buy a house at a decent interest rate in another two years or so. Our credit isn't in that bad a shape. We've kept current on everything since filing and will continue to do so. We're staying away from credit cards as long as we can. Long story short, don't let this be you. Get counseling and a good financial advisor. Your church probably has someone who would be willing to help you gratis. On a positive note we are completely debt free and realize the importance of making high down payments on things like cars and houses. We will be saving up the 20% for our next house even if that means it has to be something small.