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Questions About Credit Card Consolidation

What is a legitimate credit card consolidation company?

I know they are not the best choice. Please don’t tell me how to manage my credit cards. I am beyond that stage. This is the last option for me. I know some of the companies are fradulent and some effect your credit more negatively than others. I just need to know the names of CC Consolidation companies that are legimate and maybe won’t hurt your credit as much as others.

Industry Expert answers:

STAY AWAY from any “debt consolidation” company that promises to cut your debt in half through debt settlement….This is a risky tactic of deliberately ceasing all payments to creditors and forcing your accounts into default to attempt settlements. You pay a monthly fee to a debt consolidator….this entire fee goes towards building a settlement account and to the consolidator’s fees to “settle” your accounts in the future. Your credit card companies will deliberately not be paid so that all the accounts will default/charge-off so that they can attempt settlements at around 50%. If you are current on your accounts, this process will ruin your credit rating for sure. Debt settlement is like a roll off the dice with your finances…You can never predict how your creditors will respond to the deliberate defaulting of your accounts…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.

None of these “debt consolidation” firms have the power to force your creditors to accept settlements. Your creditors have the right to refuse these terms and take you to court.

If you have already defaulted on your cards or they’re past due, then you can negotiate directly with your creditors. See Suze Orman’s advise:

http://www.youtube.com/watch?v=jS43XFa3KGU

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Plan B is entering a Debt Management Plan (DMP) with a non-profit credit counselor like CCCS (Consumer Credit Counseling Services). Contact your local Red Cross for a referral. They can negotiate lower payments and interest rates. They do not negotiate settlements.

They will require you to stop using all credit and to cut up your cards. Your credit report will be updated to “enrolled in debt management.” This does not damage your credit, but it may make it impossible to obtain new credit while you are enrolled in their program….so don’t use this service if you anticipate applying for a new apartment, car loan or mortgage anytime soon, as you would probably be denied while you’re enrolled in the CCCS debt management program…. Otherwise, it can be a very good way to deal with your debt.
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Plan C is filing for Chapter 7 bankruptcy. Keep all options open and do what is best for you.

Does credit card consolidation work or not?

I have heard that some companies end up with all your money, are there any good credit consolidation companies and if so what are they? Thanks for any help

Industry Expert answers:

Rarely do they help.

The fact is, you owe more money than you feel like you can pay. You have to change the very behavior that is causing it. The consolidation companies figure out what you owe, add one new (additional loan) to the mix (they loan you the money to pay the others off) and then they charge you more interest. They then go to the credit card companies and negotiate on your behalf for a lower rate, or better terms.
You end up just owing MORE people MORE money.
Does that sound like a way out of debt?
Not to anyone else either.
You have to change your life to change this behavior.
Start at the website below–but the real problem is that you are living beyond your means.
You need to increase your income (a second job, more hours, sell handicrafts); decrease expenses (spend less, move into a cheaper house/apartment); or sell assets (sell the car, and walk to work, hold a garage sale.)
Yeah, I know it hurts. But you haven’t been in charge of your money–you’ve let it get in control of you.
Don’t spend the rest of your life fighting against creditors. Take control now.
The website will help you to make some tough decisions, and give you some great advice–but it is HARD WORK.

There are no good credit consolidation companies, because none of them change your attitude towards your money. You must.

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