How do you know what to do? Consolidation Loan, Settlement, or Bankruptcy?

[coalesce99]

How does everyone know what to do? What's the right thing to do? It seems like everyone is in it for themselves. Well, they act like they're there to help, but I know they aren't.

I just don't know what the best option is.

Until recently, I had probably about $18K in unsecured debt.

The siding on our house was so bad, basically in places it was being held together by the paint. Is was falling off in others. It's costing us $12K for new siding and paint.

Not sure what to do. I'm trying to get an (unsecured--we have no equity in our house) consolidation/home improvement loan from my bank. I should find out if we're accepted for it tomorrow.

The payments would be somewhere in the $600s each month for 4 years. My wife and I clear about $5K a month after taxes, and our house payment is $1K/month.

The loan would cover the improvements and a big chunk of the credit cards.

Or, should I just do a debt settlement? I've got offers from companies that sound pretty good. $4K for the whole thing. Monthly payments that are less than the consolidation loan and a shorter term.

Or should I just throw my hands up in the air and declare for bankruptcy? I'd really like to keep our house. My sons like it

Thanks everybody, like I said, I don't know who to trust or what to do.

EDIT: Don't know if it matters but I found out me and my wife's credit scores today. Mine is 703 and my wife's is 713. Don't know if that matters...

[AngelinaCat]

Welcome to the forum.

For the most part, Debt settlement companies are scams.

The first thing you do, is to start educating yourself. For the most part, this forum is trustworthy. Every now and then, some scammer or troll tries to get on, but we find them out rather quickly and they are never heard of again.

Read through all of the 'stickies' and start learning the process. It will read like 'greek' now, but after a little while, you will start to understand. Then ask questions and read some more.

Do NOT do anything rash. Calm down, take many DEEP breaths and relax a bit. You did not get into this situation overnight, therefore, it cannot be solved overnight. Take some more DEEP breaths, breathe out and relax!

All of the posters here, myself included, started at the point of frustration where you are right now. But you have found a good place to rest and learn.

[frogger]

How does everyone know what to do? What's the right thing to do? It seems like everyone is in it for themselves. Well, they act like they're there to help, but I know they aren't.

Thanks everybody, like I said, I don't know who to trust or what to do.

You weigh all of your options, and with your spouse, you make a business decision that is in the best interest of your family and their future.

Many people are here to help, most have been in your position, and will give you advice that is based upon their personal experiences, so sort thru it and trust whom you will.

So....... until recently, you had 18K in CC debt? What changed and how much do you have now?

Borrowing money can be good or bad, depending. As to borrowing money and your other questions:

1. You can't borrow your way out of debt.

2. Never turn an unsecured debt into a secured debt.

3. Debt settlement is a joke at best, a scam at worst.

Visit with a few attorneys and see what your options are.

Patience grasshopper......

[coalesce99]

You weigh all of your options, and with your spouse, you make a business decision that is in the best interest of your family and their future.

Many people are here to help, most have been in your position, and will give you advice that is based upon their personal experiences, so sort thru it and trust whom you will.

So....... until recently, you had 18K in CC debt? What changed and how much do you have now?

What changed is we had to put siding on the house. That's $12K.

Got turned down for another consolidation loan today.

What happens if we go to that official Credit Counseling Service?

[AngelinaCat]

You will have to take a pre-filing credit counseling course that is approved by the BK Court in your District. You will also have to take a post-filing course. Much of both of them deal with common sense budgeting. But if one was never taught how to budget in the first place, it is educational.

In our case, going to the pre-filing session was very beneficial. We met with a woman, who ran our numbers and told us that with our incomes and bills, that we were better suited to a CH7, rather than the 13 we were trying for. She also looked over our budget and pointed out things we missed, like 'Personal Grooming', as in "who cuts your hair and how much does it cost?" Things like that.

[Drazil65]

Hi, you have come to a good place to start your research. As a previous poster suggested, start reading here, read everything you can then start over until you are comfortable and knowledgeable. We researched for about 6 to 8 months before making a decision. Write down your options (or what you think are your options right now) then write down your options after 6 months of researching. It will probably be different as you eliminate things that just don't feel right or you know will not work for you.

During the research stage stop using credit cards period, start your journey to a cash based existence. Whether you file bankruptcy or not this will be beneficial to you and should become your new normal. You are on a slippery slope but you have the opportunity to take control and make a smart and life changing decision. Knowledge is power and you have the power to change your life but only if you change your lifestyle and stop depending on credit. It sucks you in and takes over your life until you become a slave to the credit score and the creditors.

[kornellred]

I assume the purpose of your consolidation loan would be to pay off both your unsecured debt and the recent $12K debt for home improvements? If the consolidation loan would have cost $600 per month for 4 years, would that have left you in a better position than simply paying the separate debts for an indeterminate amount of time? (I guess the answer to that question is the very reason to get a consolidation loan)

Bankruptcy is the effective remedy for handling debts that cannot be repaid. Debt settlement, as has been mentioned in preceding responses, is nothing but a scam in 95% of instances. It might be an advantage to people who owe hundreds of thousands of dollars in unsecured debt and need to postpone an inevitable bankruptcy filing for various reasons.

The best reason to file for bankruptcy is because you have to. It's that simple.

[coalesce99]

REALLY appreciate everyone's responses.

I don't think we're going to be approved for a debt consolidation loan. We've been turned down two different places. Many of the cards w/ debt have lower interest rates anyway.

The important thing is I don't have to make some rash decision RIGHT THIS SECOND. We're going to do the budget (never done one before--likely part of the problem) and convert to "a cash based existence" as Drazil65 said.

The only way we can do the home improvements is to do a cash advance. I know, not a good option, but our only one at this point. What we're going to do is do it with a card that currently has a zero balance, then concentrate all efforts to pay it off as quickly as possible, hopefully within the next six months. In the meantime we'll just pay the minimums on our other cards, and use cash for groceries and gas and so forth. We'll see how it goes. Then we can reevaluate in a few months. Sound sane to everyone?

And based on what everyone is saying, I'm pretty much eliminating debt settlement as an option. Good to know.