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Debt consolidation

 
 
Reply Tue 8 Apr, 2008 08:10 am
I have a debt of aout $10,000 on my 3 credit cards (thanks, Department of Homeland Security!), and am moving away from the U.S. at the end of August to Europe and I don't want to be dealing with that from across the pond. By that time I would like to be rid of the debt, which will not be possible if I just keep paying $800 or 900 a month till then. I want to explore debt consolidation, but I don't know the first thing about it. All I know is based on hearsay - some company will take it over, reduce the overall amount and set up some schedule..... but. What first? Where to look? How do I know who's trustworthy and who's a crook? Any advice? Any experience? Anything and everything will be appreciated.
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Type: Discussion • Score: 0 • Views: 2,928 • Replies: 56
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Ragman
 
  1  
Reply Tue 8 Apr, 2008 08:36 am
The steps you can follow yourself to pay off your debts and/or negotiate reduced payoff amount are:

1. Run a credit check on yourself (first one is free by law).

2. Find out exactly what your creditors THINK that you owe and to whom (and whether or not you agree with that)

3. Call the credit manager directly yourself and see if you can arrange payment terms and/or negotiate a reduced/discounted amount and a payment schedule that works for you. Often times they could be amenable to 50% or 65% of the revenue for accelerated payments or payoff within the year or shorter timeframe.

4. If you don't want to do this yourself or aren't satisfied after having called, then contact a NON-PROFIT CREDIT CARD MANAGEMENT COUNSELING SERVICE:

Here are a few links :

http://www.moneymanagement.org/AboutUs/

Here's an except from CCC advice site:

"Key problems highlighted in the NCLC/CFA report include:

Deceptive and Misleading Practices: Among other problems, we described agencies that do not pay consumers' DMP payments on time, that deceptively claim that fees are voluntary, and that do not adequately disclose fees. In many cases, agencies deceptively exaggerate the types of concessions they can get from creditors to get people out of debt.

Excessive Costs: As creditors have reduced funding, some reasonable fee increases are to be expected. However, in an industry that rarely charged for counseling and other services a decade ago, the vast majority of agencies now charge fees for services. At least a few agencies charge as much as a full month's consolidated payment simply to establish an account. Monthly DMP fees and costs for non-DMP services are also growing.

Abuses in Non-Profit Status: This is the focus of our testimony today. The reality is that non-profit agencies are increasingly performing like profit-making enterprises. Many agencies aggressively advertise and sell debt management plans and a range of related services. The multi-service counseling, education, and debt management plan provider is becoming the exception rather than the norm.

Decline in Consumer Education and Counseling Options: Consumer educational services are rapidly declining. Many agencies that claim to provide education and/or counseling merely sell slickly produced, but unhelpful, CD ROMs, videos or internet information. For example, our survey of agencies not affiliated with the National Foundation for Credit Counseling (NFCC) found that only five of the forty agencies surveyed offered services unrelated to DMPs. Among this minority of agencies, four out of five charged for these other services, including books and videos on debt problems"
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JPB
 
  1  
Reply Tue 8 Apr, 2008 08:38 am
Ragman wrote:
3. Call the credit manager directly yourself and see if you can arrange payment terms and/or negotiate a reduced/discounted amount and a payment schedule that works for you. Often times they could be amenable to 50% or 65% of the revenue for accelerated payments or payoff within the year or shorter timeframe.


you're kidding, right?
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dagmaraka
 
  1  
Reply Tue 8 Apr, 2008 08:38 am
oy. ok, i'll try to figure that all out. who is a credit manager? someone at my credit card company? do i just give them a call and ask for a credit manager?

thanks tons! helps me get started.
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Ragman
 
  1  
Reply Tue 8 Apr, 2008 08:44 am
Don't attempt to discuss conflicts on phone. Instead, back it up with sending copies of your own paperwork to them for charges you know you encurred.

Credit manager..is the person who is the boss of the bill collector you talk with. This is an alternative for those who have a little more gumption. Remember the bill collector is going to bounce your request for reduction in bill off of them anyhow. This technique eliminates the middle man.

Some people may rightfully debate my technique. I'm not here to debate this with those that disagree. I have done what I outlined here and have reasonable success. If others have techniques that work, please feel free to list your effective techniques too.
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Ragman
 
  1  
Reply Tue 8 Apr, 2008 08:50 am
dagmaraka wrote:
oy. ok, i'll try to figure that all out. who is a credit manager? someone at my credit card company? do i just give them a call and ask for a credit manager?

thanks tons! helps me get started.


Sorry..I was in a bit of a hurry and may have misled...in the scenario of receiving a bill from the place you actually got the bill from was what I was really referring to. OR WITH A COLLECTION AGENCY. This is more about bills like doctors bills / services and what not.

In the case of a credit card company and LEGITIMATE debt...you can first verify their charges are 100% correct. Then request a negotiated settlement of the bill. How receptive they are depends on the length and extent of the debt. I will let the web links provide the best techniques and details there.

My main purpose was to link you up with Non-profit CCC services.

CCC non-profit adv. warning:

"A statement that debt management and debt settlement plans are not suitable for everyone and that consumers can request information about other options, including bankruptcy. (This disclosure must appear in all advertisements as well). "

Here's a local resoruce for consumer info:

National Consumer Law Center, 77 Summer Street,10th Floor, Boston, MA 02110

"CREDIT REPORTS
Over 150 million Americans have credit files that are maintained by the major credit reporting agencies. Yet millions of these files contain outdated information and errors that can prevent consumers from receiving much-needed loans. Credit reports are also often accessed inappropriately for marketing purposes and for non-credit purposes, such as employment and insurance pricing. In addition, vulnerable consumers are targeted for scams by unscrupulous credit repair agencies that promise to erase bad credit reports. NCLC advocates reforms to ensure that credit reports are accurate and up to date, that financial data is kept private and is used only for appropriate purposes, and that consumers are protected from deceptive credit repair services.

DEBT COLLECTION ABUSE
NCLC combats abusive debt collection practices, which have consistently been the leading cause for complaints year after year to the Federal Trade Commission. Problems include abusive creditor tactics, difficulties in receiving meaningful response to disputes about a debt, the growing debt buyer industry and the sale and resale of ancient debts with little recordkeeping, and abuse of the court system. Freezing of protected Social Security and other exempt public benefits is and the growth and collection of medical debt are also growing problems. NCLC protects the rights of lower income consumers subject to debt collection. "
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Gala
 
  1  
Reply Tue 8 Apr, 2008 09:02 am
Huh. I thought debt consolidation meant you put it all on one credit card or whatever and pay it from there. You mean, they actually cut out some of what you owe?

Because I am a Luddite when it comes to knowing these things here is my Ludditean suggestion:

Find one of those no interest credit cards. They let you put all of your debt on one card and then pay it off from there. Usually the no interest offer lasts about a year, which gives you plenty of time.
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Ragman
 
  1  
Reply Tue 8 Apr, 2008 09:11 am
Gala wrote:
Huh. I thought debt consolidation meant you put it all on one credit card or whatever and pay it from there. You mean, they actually cut out some of what you owe?

Because I am a Luddite when it comes to knowing these things here is my Ludditean suggestion:

Find one of those no interest credit cards. They let you put all of your debt on one card and then pay it off from there. Usually the no interest offer lasts about a year, which gives you plenty of time.


The operative phrase here is negotiation.

I'll let you provide some sort of link to a no-interest card that consolidates that sort of loan. I'm not familiar with such a card or such an agency's services but my guess is that would probably be done through a For-Profit agency that does Debt Consolidation as opposed to non-profit agency.
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dagmaraka
 
  1  
Reply Tue 8 Apr, 2008 09:17 am
yep, it's all legitimate credit card debt. i wasn't charged for anything that i didn't buy, it's all good on their side. But.... I am moving abroad, and cannot imagine how i'd continue paying from there, or even if i'll be able to - as i'll earn less money. Thus I'm hoping I can negotiate it down a bit - that way they get more out of me too, i think.

i'll look into no interest credit cards, though with most f them i'd have to pay some interest on the balance transfer. If i find one with 0% balance transfer, that would save me over $100 a month, that's a good start for sure.
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Ragman
 
  1  
Reply Tue 8 Apr, 2008 09:33 am
Here again is that local resource for consumer credit info:

National Consumer Law Center, 77 Summer Street,10th Floor, Boston, MA 02110

I'd try this resource to see if they can steer you toward a no-interest credit card to pay off your debt - and also ask them if they know a way that you can make payments from abroad.
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Gala
 
  1  
Reply Tue 8 Apr, 2008 09:41 am
dagmaraka wrote:
yep, it's all legitimate credit card debt. i wasn't charged for anything that i didn't buy, it's all good on their side. But.... I am moving abroad, and cannot imagine how i'd continue paying from there, or even if i'll be able to - as i'll earn less money. Thus I'm hoping I can negotiate it down a bit - that way they get more out of me too, i think.

i'll look into no interest credit cards, though with most f them i'd have to pay some interest on the balance transfer. If i find one with 0% balance transfer, that would save me over $100 a month, that's a good start for sure.


Usually the transfer is about 3% or no more than $75. I'd look into paying it down After you move-- because the exchange rate is on the side of the Euro, no? You may save yourself some money that way.

The credit card companies are trampling over themselves to get your business-- I can see them salivating now. Even if you are unable to get it all on one interest free credit card, there are always more, so you may end up with 2 interest free cards with a limit of $6,000 or whatever.
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dagmaraka
 
  1  
Reply Tue 8 Apr, 2008 10:00 am
i do get gazillions of credit card offers every day - because i have good record, always pay on time and have quite some money on them - i'm their ideal customer. guess i should start reading through those offers. it would be easier tohave them all in one account, yes.
0 Replies
 
hamburger
 
  1  
Reply Tue 8 Apr, 2008 10:11 am
JPB wrote :

Quote:
Ragman wrote:
3. Call the credit manager directly yourself and see if you can arrange payment terms and/or negotiate a reduced/discounted amount and a payment schedule that works for you. Often times they could be amenable to 50% or 65% of the revenue for accelerated payments or payoff within the year or shorter timeframe.


you're kidding, right?


just watched a feature on CBC-TV .
random people in a shopping mall were asked by interviewer if they might want to get a better deal on their credit card : LOWER INTEREST RATES !
they phoned their credit card companies , explained that they had been good customers - payments up-to-date !!! - , asked for a better rate .
there were six or seven people that phoned : all but one were offered a substantially reduced interest rate !!!
a phone call costs you NOTHING !

of course i would NOT mention that i'm in the process of moving overseas !!!

Debt Consolidation : EXTREME CAUTION ADVISED !

since credit cards are accepted pretty well world-wide , i doubt that there would be serious problems having a european bank looking after accepting the payments for tranfer - should pretty well be instantenous .
simply phone the international assistance of the credit card company - just don't mention your name - and enquire . again : it costs you nothing .

and all the best on your new job in the netherlands - or holland , as i call it . always found the dutch to be pretty easygoing .
(just noticed : we call them dutch , but call the country netherland or holland , but in german they are called hollaender or niederlaender :wink: ) .
hbg
0 Replies
 
fishin
 
  1  
Reply Tue 8 Apr, 2008 11:44 am
Gala wrote:
Huh. I thought debt consolidation meant you put it all on one credit card or whatever and pay it from there. You mean, they actually cut out some of what you owe?


There is debt consolidation and then there is debt consolidation...

You can do exactly what you described. Many banks and credit card companies will offer it. If you owe $3000 each on 3 different credit cards, they pay them all off and now you have one debt to one comapny for $9000 (plus any transaction fees). This is the "I can afford to pay off my debts but one payment would make life easier" option.

The other form of it is usually used by people that are in debt and can't afford to pay off the full amounts and sometime sthis form is also called "debt relief" instead of consolidation just to avoid the confusion. These are the organizations that contact your creditors and try to get the amounts you owe reduced and/or lower the monthly interest charges. Some of these are non-profit, same are for-profit. Some of them will set it up where you pay them one amount/month and they'll pay out amounts to your creditors. Others require that you still make the individual payments yourself. This is the "I can't really afford to pay off my current debts but if the monthly payments were a little lower I probably could..." option.

The major difference in choosing between these two options is what can happen to your credit report during the whole process.

In the 1st option the 3 original creditors are all going to report your account as "paid in full" and the bank/credit card company that does the considation will do the same if you pay it off as scheduled. You are entirely free of your original creditors with this option and now only obligated to one.

With the 2nd option your creditors MIGHT report your account as "Paid as negotiated" instead of "Paid in full". And if you run into problems during the process and can't make payments you are going to take a hit from every creditor you delay payments on. You are still 100% on the hook with every one of your individual creditors with this option.
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Gala
 
  1  
Reply Tue 8 Apr, 2008 11:48 am
If you do go this route there is one thing you ought to bear in mind-- I believe Congress is working on changing this-- but, the credit card companies might say one year interest free, etc. But around about the 4th month they'll send you a letter saying, we've changed the agreement, it's only 8 months interest free.

So, when you get the offer, call the company and grill them on the terms and conditions. This way they won't be pulling a fast one on you.
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dagmaraka
 
  1  
Reply Tue 8 Apr, 2008 12:13 pm
I just called Bank of America (my bank) to enquire about the Gold Option - personal loan that would knock down the APR from 20% or whatever it is to 8% and i'd have all debts in one place. Sounds good...but...I understand very little about it. I requested that they mail or email me an overview of how it all works, with terms and conditions. She said they are happy to answer all of my questions but that the application has to be decided instanteneously. I told her I'm not comfortable with that and that I'll call back.

What's up with that? Why can't they email me with a simple description of the plan? I can't tell if it's a good plan or a bad one, I don't even know how to discern between good and bad plans, I want to be able to sit down with a friend who has a clue (or with you people) to go through it and only then decide. Is that not reasonable? Grrrr. I do like to have everything within one bank, so I chose to find out about this option, but they are making it difficult. I'm no wiser than before I called.
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Robert Gentel
 
  1  
Reply Tue 8 Apr, 2008 12:25 pm
The personal loan mainly differs from the credit card debt in two areas:

Interest rate (much lower, good for you)
Fixed payments (No flexibility. You must pay what you agree to per month)

So, find out a number you can reliably pay per month, and work out a loan for what they can offer you in that range. If you can pay more, you can still pay the credit card directly.

The personal loan option is really quite simple. Less interest for a fixed payment schedule. Just make sure you really want to commit to the payments and the rest of the details can't possibly be worse than the deal you currently have on the credit card.

I am a fellow BOA customer doing personal and company business with the bank

My business cards have traditionally had $10,000- $20,000 balances and I've looked at their loans recently when wanting to restructure the debt. If you can make the payments, and do indeed want to pay that amount you are getting a good deal paying less juice.

I, on the other hand, just offered that as an investment to my brother. I'd rather pay him the juice than the bank anyway and he gets much better short term investment rates and I get much lower interest rates.
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Robert Gentel
 
  1  
Reply Tue 8 Apr, 2008 12:31 pm
Here are some numbers (guessing a bit):

At your current interest rate, about $160/month in interest.

At the loan interest rate, about $68/month in interest.

You are probably saving close to $100/month using the loan. And as long as you can pay it on the terms you agree to it's only bad if you could have gotten a much better loan (and you probably can't beat that by much).
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ebrown p
 
  1  
Reply Tue 8 Apr, 2008 12:33 pm
What are you worried about?

My advice is to write them a letter saying that you want a lump sum payment. Then stop paying until they get back to you-- and they will get back to you. They often make offers to settle for far less then the current balance (they do whatever is most profitable for them and they don't want to pay court costs). In your case... they can't even take you to court.

It seems to me that the penalties for not paying aren't very harsh ... What the heck what are they going to do? Can they even trace you now ?

In fact you could just stop paying and then wait until they come to you with an offer. You can even negotiate your credit report on this.

You certainly shouldn't be paying very high interest rates.... and it seems to me that you are in a very good position to dictate your terms.

Credit card companies are bastards... they are somewhere in between used car dealers and child pornographers in my book and I wouldn't hold it against you if you just walked away.

If you are too good a person to screw them... then pay what you think is fair. But I don't think you need to worry... and you certainly don't need to let them screw you.
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Robert Gentel
 
  1  
Reply Tue 8 Apr, 2008 12:50 pm
dagmaraka wrote:

What's up with that? Why can't they email me with a simple description of the plan? I can't tell if it's a good plan or a bad one, I don't even know how to discern between good and bad plans, I want to be able to sit down with a friend who has a clue (or with you people) to go through it and only then decide. Is that not reasonable? Grrrr. I do like to have everything within one bank, so I chose to find out about this option, but they are making it difficult. I'm no wiser than before I called.


More information

DISCLAIMER: I take no personal responsibility for any financial advice. I am merely a dog who learned how to type.

Looks like you can get a loan with "as low as" 8.99% APR. It may vary, but anything below the 18.90% or so you currently pay is a good deal. For each percentage point lower you get you are going to save about $9 a month.

You can shop it around, but consider time as well. An improvement of a percentage point would only make a difference of about $108 in a year, but if you delay one month shopping rates or if working with another bank takes longer you can lose close to $100 in savings from the loss in time alone making it kinda pointless.

As long as there are no gotchas with the BOA loan (and I don't see any in all the options I've seen them offer me) and you can make the monthly payment you are fine.

My advice: Take a loan from BOA as soon as you can (review the details of course but it should be good) for an amount with a monthly payment you can comfortably (not aggressively) pay. In the beginning especially, try to pay off more aggressively on any remaining credit card balance first, then the loan second (they should offer you no pre-payment penalty but the credit card debt is the priority). After the credit card balance is zeroed then pay off the loan as aggressively as you are able (while still making sure you can always make the minimum payment you agreed to).

And there's no deal from anyone that can take care of $10,000 in 4 months at $800/month anyway, so you need to be ready to deal with this from across the pond.
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