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Debt consolidation

 
 
dagmaraka
 
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Reply Tue 8 Apr, 2008 01:02 pm
thanks for the info. i will call them back i guess.


in the meantime i found out that ALL of my tax documents were in a suitcase that got stolen this Sunday. just remembered it. that means my SS#, full address and such are on it. F*ck.
oh well, on the phone with IRS, hope they can help me, not sure how. though.
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ebrown p
 
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Reply Tue 8 Apr, 2008 01:06 pm
I guess I am agreeing with ragman... my additional input is that you are in a very good negotiating position.

The credit card companies want to make as high a profit as possible, and chasing after you is expensive (i.e. not a good way to make profit). As soon as they realize that offering you a deal is the most profitable option, they will give you a deal.

I would not go through a credit counseling program (even the non-profit ones are funded by the Credit industry and don't have your true interests at heart). I might find a good CPA type.

You can certainly negotiate down the balance (since it is in their interest to keep you from just walking away), and then either get a good payment plan (with a decent interest rate), or you could get a third party loan (at a good interest rate) for a much lower balance).

But don't let them push you around. You really are in a very good negotiating position. If you realize this, you can deal with them directly.
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Gala
 
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Reply Tue 8 Apr, 2008 01:07 pm
dagmaraka wrote:
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.


Okay, this is the creepy part of it. But, the good side is, you can agree to signing up, they'll send you the terms and conditions and if you don't like them you don't even have to activate the card.
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dagmaraka
 
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Reply Tue 8 Apr, 2008 01:17 pm
gala, you are right.

ebrown, what's a "CPA type"?
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Gala
 
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Reply Tue 8 Apr, 2008 01:37 pm
fishin wrote:
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.


Thanks for the thoughtful explanation, fishin. I had no idea you could negotiate down a debt in the your 2nd scenario you've described.
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dagmaraka
 
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Reply Tue 8 Apr, 2008 02:00 pm
i'll have to deal with fraud alert and postponing tax filing and getting all the tax documents first i guess. or at the same time, but fraud alert first. i hope the nasty british pimpled kid who stole my suitcase won't figure out what he can do with my SSN... grrr.
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Chai
 
  1  
Reply Tue 8 Apr, 2008 02:15 pm
dag, I just scanned through this, and I'm a little confused.

You say you owe about 10K, and are paying it off at 8 or 9 hundred a month, which is apparantly within your means.

When you spoke of consolidating your debt, you mentioned that they, or you negotiate to where you have to only pay a smaller amount.

You're going to another job in Holland, and will have, I'd hope a comparable income, where you could pretty much pay the same amount. Even paying half of that would get the debt cleared away in a short time.

Why are you seeking to have your debt reduced, if you made the purchases, and are able to pay them?

I always thought negotiating a reduction in the amount owed was for when you were in financial straits, with no improvements in the foreseeable future.

You mentioned before about getting credit card offers for X amount of time with no interest. That's the way I'd go. That's how we paid for our entire remodeling, with may a hundred dollars interest actually paid out over, oh, 8 years or so, and that's because of timing where the transfers didn't get to the card getting paid off exactly on time, maybe a day or 2 late. We're talking close to 100K, and it wasn't at all hard to do. Since you have good credit, I'm sure you have some great offers in your "to shred" basket right now.
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littlek
 
  1  
Reply Tue 8 Apr, 2008 02:16 pm
CPA = certified public accountant
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dagmaraka
 
  1  
Reply Tue 8 Apr, 2008 02:35 pm
chai, you might be right. i'm not looking to weasel out, just to consolidate my three credit cards into one place with much lower (or no) interest rate...

so a no interest credit card seems to make more sense than the 8.99 APR personal loan.... hmmm...must explore credit cards now.
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Gala
 
  1  
Reply Tue 8 Apr, 2008 02:36 pm
Just an aside about Bank Of America-- This is my bank too and I have had no complaints about them. I think you'll be okay if you go through them.

They keep on the ball about protecting your account, if your card is lost or stolen, etc.

Whereas, I've had credit cards through Providian and they were lame, Citi-- they were medium lame.
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dagmaraka
 
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Reply Tue 8 Apr, 2008 02:39 pm
when deciding between BoA personal loan and a no interest (at least 12 months credit card), what would be a better choice? I would think the no interest credit card, but maybe it's more complicated than that....?
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Chai
 
  1  
Reply Tue 8 Apr, 2008 02:44 pm
Go online to citibank too.

they have good offers sometimes.

(oh, BTW, sure didn't mean to imply you were being weasley, on the contrary, I think you're very honest about these things.)
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Gala
 
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Reply Tue 8 Apr, 2008 02:46 pm
Chai is correct-- I've rolled over stuff onto no interest credit cards as the ones with the no APR's were about to expire. All you pay is the transfer fee.

I don't know if they still hve this feature on NPR, but a few years ago they used to have a guy who would answer listeners questions about ethics.

Someone wrote in wondering if his rolling over his credit cards onto new ones when the no APR expired was ethical or not. The Ethicist's response was "Hey, the credit card companies are offering, so you have every right to take it."

By the way, a few years ago credit card companies used to have the roll over with absolutely no balance transfer fee. Then they wised up and realized they could make some money off of it.


One more thing Dagmarka, $10,000 is a lot of money to you and me, but I am certain they have some people who are rolling over some of the most outrageous, inconceivable shop-aholic debt imaginable.

I'd start by googling "no APR credit cards" if you can't find any offers in your shred bin.
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dagmaraka
 
  1  
Reply Tue 8 Apr, 2008 02:46 pm
oh no, i know... just explaining that knocking down the debt is not my primary goal (woudn't mind of course), just want to get rid of the evil interest rates, understand it better and have some Plan for self in sight.
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Robert Gentel
 
  1  
Reply Tue 8 Apr, 2008 02:48 pm
dagmaraka wrote:
when deciding between BoA personal loan and a no interest (at least 12 months credit card), what would be a better choice? I would think the no interest credit card, but maybe it's more complicated than that....?


The no-interest credit card is a better choice at least for the duration of the "no-interest".

But the "more complicated" part is that they are going to have fees, and at the rate you plan to pay it off it is going to effectively eliminate a large part of the advantage.

Additionally, it can hurt your credit to have more cards (as can canceling your cards later) and you may not be able to get one card for the whole amount and then you'd need a few to use.

Essentially, I think it can be a much better way to do it, but it's also inherently much more complicated.
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Heeven
 
  1  
Reply Tue 8 Apr, 2008 03:12 pm
I have it! I have the solution!

Get LittleK to pay all your credit cards for you. You don't even need to reimburse her. She is loaded, right?
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ebrown p
 
  1  
Reply Tue 8 Apr, 2008 03:26 pm
The other problem with no-interest credit cards is that they are credit cards. This means you are still playing the game of the sharks who are charging you the obscene interest rates in the first place.

The goal is to get as much of your money as possible (that is the only way they make money)... and the reason they offer no-interest credit cards is because they think there is a good chance you will slip and owe them lots more money.

Be careful.
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dagmaraka
 
  1  
Reply Tue 8 Apr, 2008 03:41 pm
alright. i went with the BoA personal loan after all. I have only good experiences so far with BoA, they took care of my 3 credit cards (done! paid off!) and i will pay them directly at $ 234 a month. The nice man explained to me that the difference is that with a personal loan what I'm paying monthly goes directly towards the premium and not towards interest...means nothing to me but it sounded nice and he said i'll be able to pay it off a lot quicker. And it will go directly off my checking account, so I won't miss any deadline, no surprises, no twists. I'll keep one credit card for safety, of course will try not to use it at all. I feel a lot better.

And I managed to file a fraud alert due to my stolen suitcase which contained my tax documents.... another stress reduced. What a week.
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Heeven
 
  1  
Reply Tue 8 Apr, 2008 04:22 pm
On a different but similar note, how will your file your 2008 taxes?

I've often wondered when people leave the country, how they pay or file their taxes after leaving.

If you stay until August 2008, don't you still have to do a filing? If you get a refund for the year 2008, do you have to keep a bank account in the U.S. to direct-deposit this refund into? Or how to the IRS get the money back to you?
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dagmaraka
 
  1  
Reply Tue 8 Apr, 2008 04:34 pm
i will keep a bank account open - not only for taxes, but also because i'll keep working part time for current boss and direct deposit will be easiest. also it will help me with paying off the debt. call me silly, but i will pay it off, no matter how long it takes or where in the world i am. i know that they could do little to me, but i don't care. i prefer to pay.... so i'll have account here for awhile.
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