Get debt free?
Asked by
El_Cadejo (
34610
)
February 27th, 2009
I constantly hear all these commercials on the radio about how these companies will consolidate your debt and make it easy to pay. And how they are a non profit organization and you some how end up paying way less than you owed in the first place. Is this complete bullshit or is this legit?
I mean if it is legit i just dont see one why this company gives a rats ass about you if they arent making anything, and how exactly are they lowering your debt. I mean why would the credit card companies that you owe money to agree to take less money than you owed them in the first place?
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7 Answers
most of them are bullshit… as my dad found out the hard way.
They are sponsored by lender/creditor groups.
They’d rather have you pay back half over the next 20 years than file bankruptcy and pay nothing.
I don’t know how those companies work, but you can end up paying less than you owe just to clear the debt. It wasn’t through one of those companies but my mum struck a couple of deals with her credit card companies and managed to pay £2000 worth of debt with £900 (this was an unusual circumstance, mind you, but the point is, deals can be made)
Many of them are garbage.
Some are legit and are frequently affiliated with religious organizations.
They are usually doing what you could do on your own…..also they typically give you instruction on money management.
A lot of people prey on others who don’t know a lot about financial issues. Payday lending, furniture rental places, free credit cards, and some debt consolidation places.
That said, there are legitimate companies who can help negotiate lower interest rates. They simply know how to talk to these companies and make deals, and have the time or incentive to help sort these things out. For instance, if a maxed out card isn’t getting paid at all, the credit company may be willing to reduce the amount in order to establish a guaranteed payback schedule. They would do this to get back something as opposed to the person filing bankruptcy and potentially not pay back any money.
As a general rule you cant get out of debt by taking on more debt. If all your debt is on high interest store cards/ credit cards or what have you then you may be better off taking out a personal loan and paying them all off. However there are organistions out there that are just trying to make money of scared vulnerable people because they are an easy target. The best people to talk to are your independent financial advisor or perhaps a charity that specialises in helping people in debt. It may also be worth swapping credit card providers and transferring balances to get a better deal.
I have gotten out of debt a few times. Once was by balance transfers to consolidate my debt onto the card with the lowest interest rate. Another time I got a debt-consolidation loan from my local Credit Union. I have also been through bankruptcy.
Basically the non-profits simply negotiate lower interest rates on your behalf. But you can do this on your own, too. It takes persistence, but you can call your creditors and negotiate a lower rate. You have to be patient and persistent, and sometimes need to ask to speak to supervisors and such. There’s a ton of advice on this topic on the web.
And learn from my (poor) example: Once you get out of debt, DON’T get back in!!
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