Debt Reduction Co. vs Bankruptcy

[donmas]

As an alternative to bankruptcy, has anyone contacted any of the companies out there that offer to reduce your debt and have you paid up in say 3-36 months? Are these legitimate and do they charge large fees? I'm thinking possibly attempting to contact my creditors myself to see if they can cut in half my debt. This debt all stems from a small business I had. Personal credit I am fine (or was).

[woeisme]

Cccc

I used a credit counseling agency in the past to consolidate bills and negotiate with creditors. They lowered the interest payments, but none of the balance, and in the 3 years I was paying them back I was so strapped for cash that I ended up getting other credit cards so I could afford things like groceries and gas every month, so ended up back in the hole before I was even done with the plan. Their definition of disposable income was so insane, much more strict than the Chapter 13 trustees, that I just couldn't sucessfully do the plan without incurring new debt. After about 3 years into the 5 year plan I finally gave up and went back to paying myself, and dug myself even deeper in debt (although it wasn't the final straw leading to my Chapter 13, my husband having to go on disability and medical bills were what finally drove us over the cliff, but having the high credit card debt kept us from being able to deal with those downturns.) If you do go that route, remember that you have to pay taxes on any amount of the debt that your creditors decide to forgive, so if they forgive half of say 50K in debt total, you now will owe taxes on the 25K of forgiven debt, the IRS considers that to be income. Good luck!

[SANRA308]

Dont Even Consider It Unless You Have Money In The Bank To Settle Now And If You Do Have The Money You Can Settle On Your Own, These Companies Charge Large Fees To Do This, Also You Stop Paying Your Credit Cards And Start, Either Saving The Money Yourself Or Send It To The Company, So Be Ready Do Be Harassed Alot, Plus The Intrest, Late Fees And Overlimit Fees Can Add Up Quik So If You Owe Alot On Many Cards The Ones That Get Settled Last Will Be Hugh Example If 15000 Plus 3years Intrest At 30% [becuase Your In Defalt] And Late Fees Ect Ends Up At $39000 If They Settle For 50% Your Pay The Card $19500 Then The Settlement Company 25% Of The Savings Which $4875. They Saved You Nothing And You Get Taxed On The 19500 Written Off. Trust Me This Is How We Ended Up In Bankruptcy We Tried Two Differed Companies After 1 Year Went From Owing 76000 To 150000 Lost 4000 In Fees Got Enough Back Out Of The Account To Pay For Bankruptcy Sooooo Sad And We Were Being Sued By 4 Of The 10 Cards

[dac67]

I tried a debt settlement co. but ended up with one official law suit and one other who said they were going to start the process, I was up against a wall and I went to bankruptcy. I couldn't take the stress, so my law suit is on hold unless my case is dismissed.
There are better debt settlement co., they actually change your address to thiers so the co. can't harass you , they go to them. CC Co.'s I don't think are too keen on settlement.
Personally debt consolidation is so exspensive, they are all nonprofit but we would of ended up paying WAY above what we really owed and the monthly payment was too steep for us.

[SANRA308]

the company we used changed our address so now our credit report is wrong, states that we lived in california when we didn't that was a issue, but we were still harassed becuase companies are smart they still call the phone number they have also called job, family ect.also the reason they have you change your address is so you don't get statements and see how much they are charging in intrest and late fees thats how we ended up almost $40,000 more in debt in just 1 year

[thinkingbk]

I say do your research as stated in a previous qoute credit counseling is about a 3 to 4 year program. With the Debt consolidation alot of time the companies are taking payments from you putting it into a savings and when there is enough there they will negociate with your lowest balance creditor. I say there is no quik fix for the situation but definatley want to investigate any company you will send money to in order to resolve your debt

[dac67]

That is good to know SANRA308, see those are all things that we would of never of known if we would have gone with them, it sounded good at the time, these co.'s know how to make it sound so great. Very true there is no quick fix, and you really have to do your homework, there are so many co.'s and you need to check out alot. Debt settlement for me didn't work AT ALL.

[HHM]

Here is another thread that talks about these programs

http://www.bkforum.com/showthread.php?t=17169&highlight=Debt+Settlement

[dscurlock]

That is good to know SANRA308, see those are all things that we would of never of known if we would have gone with them, it sounded good at the time, these co.'s know how to make it sound so great. Very true there is no quick fix, and you really have to do your homework, there are so many co.'s and you need to check out alot. Debt settlement for me didn't work AT ALL.

There will always be someone out there to take advantage of your bad fortune, weather it be debt consolidation, your attory, BK 13, high APR on home loans and credit cards, there will always be someone waiting with their hand out, laughing at you..

Every month when i get my cc notice, there is a statement on there that says, if you miss 1 payment, your apr wll go to max, i think 30% and it doesnt matter if you missed the payment date by accident or not, does not matter to them, greed has taken steap hold of your bad siutation....

you miss your rent payment by one day, boom $75 late fee, and $5 per day thereafter.... you signed most of your rights over to the apartment complex, even your privacy, they can come into your apartment at anytime they wish, if you refuse them, or an inspection, then they can take more action to get rid of you.

I think everyone gets the picture.