Debt Relief Comments, Suggestions, Etc.

Updated on September 02, 2010
M.B. asks from Aurora, CO
14 answers

Has anyone ever used a debt relief company to eliminate your debt? My husband and I are tired of not being able to pay down our mounting bills (about $25K) and think the only way to get some relief is to go through one of these companies. I'm looking for comments about various experiences, how life might have been without any credit, any damage done to credit ratings, etc. Is this really the only way?

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So What Happened?

Wow! I am so inspired by all of your comments and feedback. I'm so glad I asked! Now that I know, we definitely will not go the route of the debt relief company and will definitely check out Dave Ramsay. Thank you all SO MUCH!

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answers from Denver on

All I have to say is Dave Ramsey! He's the man to help you. We have paid off so much debt using his baby step plan.

2 moms found this helpful

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answers from Fresno on

M., we looked into this and decided against it. The process just seemed kind of sketchy (and we were going through a legit agency) - basically they have you stop paying on all your bills and put money in some type of escrow account (so you're still paying, it's just not going to your credit cards). After a few months of not getting paid, credit card companies are in theory more willing to negotiate, and then the credit counselors negotiate with the credit card companies for a payoff amount lower than what you owe. It damages your credit enough that you might as well declare bankruptcy and just be free of the debt.

Instead of doing that, we joined - it is not credit counseling, but basically you enter all your debts on there and it helps you track and prioritize what you should be paying to each creditor to pay everything off the fastest. Imagine my surprise when I discovered we will be debt-free by March 2013! (We owe a LOT more than you do, by the way.) You get 30 days for free to try it out and see if you like it - if not, just cancel. Otherwise it's a little less than $15 per month and it automatically links up with your credit card accounts, car loans, basically anyone to whom you owe money, and tracks everything for you. If you're able to make an extra payment during the month, it will tell you how much time and money you've saved yourself long-term. It has been very motivating for us. I would recommend giving it a try before going into credit counseling.

9 moms found this helpful


answers from Pocatello on

Catherine is right. I work for a collection agency, in fact my job is to work with the debt settlement and credit counseling companies. We have so many clients enrolled with these types of programs! But the silly thing is, I am amazed at how many of the clients drop out of the programs, or cannot afford them and stop making payments. Obviously, these types of programs just do not work, most of the time.

The settlement company fees can be quite steep, and your monthly payment will go to them until their fees are paid, not to your creditors. After that, the monthly fee you pay will be saved in an account until there is enough saved for the company to present a settlement offer to one of your creditors. The problem is, all creditors are different: some will accept a very low settlement amount, some will want at least 50% of the balance, some will not settle at all. Keep in mind that in the meantime, your past due accounts are still generally being reported to the credit bureaus as past due. In the end, it will still take you years to pay off the debt, your credit report will be impacted, and there is no guarantee as to how much money you will save.

Here is what I what suggest: Contact your creditors yourself. Many of them will be agreeable to working out a reasonable repayment plan with you, or even a settlement. Make sure you talk to a manager or supervisor.Here is what you say: "If I pay $X by the end of the month, will you consider it paid in full?" Then get the agreement in writing (even if it is via email). If the calls are getting out of control, send your creditors a letter to contact you only via email or US mail. Keep good records of your debts and these agreements. Make sure you know which accounts have already been reported to the credit bureaus and when the other ones will be reported- your goal should be to pay off before they are reported, if possible. Some companies will agree to delete the credit reporting upon receipt of payment, so go ahead and ask them. I just think it is silly to pay a third party--- they really do nothing! They only send out form letters to the creditors to stop calling the client, and collect your payment! Do it yourself and save the fees.

2 moms found this helpful


answers from Pittsburgh on

Nope--not the only way and generally always a bad idea.

DAVE RAMSAY! This will help you clean up your debt with simple, FREE step by step instructions.

It will not be easy. You didn't get into debt overnight and you won't get out overnight but it CAN be done!

1 mom found this helpful


answers from Kansas City on

If you are not so bad off that you are putting necessities (not wants) on a credit card, then put your credit cards in a ziploc with water and stuff them in the back of your freezer. Then, go to the library and RENT the TMMO by Dave Ramsey (why spend 20 bucks when you can get it for free?). I also rented some of Suze Orman's books and came up with my own plan that used what I considered to be the best of both.

Do NOT, NOT, NOT use a debt relief company!

Good luck!!!

1 mom found this helpful


answers from Boise on

The Dave Ramsey Total Money Makeover book is only $10-15, and so worth it. I would suggest reading that before spending any more on classes or other books. That way if you don't like it, you haven't lost much. I was skeptical and thought it was a scam of some sort, but I have been doing it for a year now and we have paid off one credit card, and our car 1.5 years early. We still have 2 credit cards left, which should take a little over a year. It really changes the way you think about money. Don't do the debt relief, you can do it yourself.

1 mom found this helpful


answers from Houston on

There are reputable companies out there (the ones advertised on tv are most likely not). The way the reputable ones work is that they negotiate a lower interest rate, help you come up with a budget and then you pay them and they pay your creditors. It does stay on your credit, but I can't remember how long. If you really want to go this route I would check in the area for a reputable company.

However, I would second the Dave Ramsey's Financial Peace. Many churches offer this 13 week course. The cost is usually $100 for the course (I would recommend it over just buying the book) and most have "scholarships" if you cannot afford it. I will say it is the best $100 you will ever spend. IYou don't have to belong to the church to take it and it is not super "churchy", although the church version does have some Christian backup to what he is teaching.

In Financial Peace, Dave shows you how to go to a completely cash system, save money and pay off your debts. He teaches how to become financially independent, not just by paying off your debts, but also keeping out of debt and handling other matters such as insurance, etc. If you do not know who he has, he has a tv show on one of the financial channels now but at one time he lost everything and was in a huge financial crisis. He dug his way out and helped others get out of debt using his method, he eventually wrote a book and then developed this series of classes. It is not a "fly by night" get out of debt quick scheme. It is a financially healthy way of life. You can go to to find out more information, including classes in your area.

My husband and I took this class and were amazed at how much we didn't know and didn't understand. You have to go into it with the determination to become debt free, but you will feel so much better when you come out of the class.

Good luck!

I wish you good luck



answers from Topeka on

I agree with some of the others that are suggesting that you stay away from the debt consolidation businesses and do something like the Dave Ramsey course, this will not only help you get OUT of debt, it will help you STAY out of debt!!!
I had to develop an entirely new mindset...I had to learn that "things" don't matter...that the sense of well being that I get from being debt free is worth WAY more than another mountain of "things" or a new car or bigger house or piles of gifts under the Christmas tree for my family.
I work with the public and I cannot tell you the number of times that my customers will open up their wallet and I will see easily a dozen credit cards there, and sometimes they will go through 3 or 4 of them before they finally find one that has enough credit left on it to be able to charge the small purchase that we are dealing with.
I would start by putting ALL of your credit cards in an envelope, seal it up and put it away someplace safe in your home. Only deal with cash, and use checks only to pay bills, not to purchase things from the store. This way you are not tempted to add to your debt. Now, go to Dave Ramsey's website and see where the closest class is being offered and go sign up!!! I have never attended one of his classes but I have heard him talk on tv many times and he seems like a very wise, very well grounded man.
As someone else has already didn't get into debt over night and you aren't going to get OUT of debt over night but you can start down the right road right now!!!



answers from Chicago on

I also HIGHLY suggest a Dave Ramsey class....go to his website & plug in your zip code to find a class near you....there will be so many, & they all will have different days & times so there is one bound to fit your schedule or I have noticed he also has an online class. But I would say go to a class. The class is awesome for everyone whether you have debt or no debt, if you are wealthy or poor. He will teach you exactly what the debt relief companies do, except you can do it for yourself at no cost.

My husband & I took the class this past winter, we hardly had any debt at all but we still walked away with so much knowledge. Also you can take the class as many times as you want at no additional charge & you get the book & the cd's & a lot of other things too. I agree with the one poster that said it will be the best $100 you will spend. Best of luck



answers from Austin on

Don't do it! It is a scam. Get a second or third job and just start throwing money at the debt. Read The Total Money Makeover by Dave Ramsey. Visit Dave's site. Lots of very useful information.




answers from Phoenix on

look into dave ramsey. total money makeover



answers from Denver on

Yes, we used Debt Management Inc. It did not work for us for the reason that my husband's hours were cut back so severely that we couldn't make the payment to them. We ended up filing bankruptcy and honestly, I wish that we had done it a year before. However, it was nice to be able to make one payment per month and not have the stress of bills coming in and money going ouot all the time. Still it would be better for you to negotiate with the credit card companies directly and not go through a debt relief company. No matter what they say, it is a hit on your credit rating. I obviously don't know your whole story but can tell you that bankruptcy was the answer for us. You may want to meet with an attorney and see if that is what you really need to do instead of debt consolidation. BTW, I agree with the Dave Ramsey information that everyone is giving you. Sign up for a Financial Peace University class today!



answers from Detroit on

From what i read recently, most of these companies required an up front fee and it can take 2-3 years before anything is resolved. There is new legislation effective next month that no longer allows them to get the fees up front so most of them are starting to file bankruptcy and the money that has been paid into their accounts (to ultimately pay off your debt) is going to be very hard to access.

These companies are parasites. Sit down with your husband and create an excell spreadsheet detailing everything that you have to pay every month and how much money you have coming in every month. Get rid of a couple of luxery items (eating out, cable etc) and use that moeny to throw at your bills.

Good luck - it's not easy, but you don't have to pay someone else to help you get out of debt (they aren't as motivated as you are, they just want your money).



answers from Seattle on

9 times out of 10 it's better to declare Ch13 Bankruptcy than to use a consolidation company. For one thing, ch13 only impacts your credit for 3-10 years, while consolidation company schtuff stays on for 12 (5 years until all the bad debts are paid, plus 7 years for all the defaults to fall off your report). For a 2nd thing, you are actually protected under law when filing for bankruptcy.

Call the gov. agency attached / for debt counseling. They'll run the numbers with you and are non-interested... so you get an honest appraisal of your situation.

However, if it's possible, a consolidation LOAN (through a bank) will actually pay off all your debts, save the loan... and then you only have 1 low monthly payment.

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