Need Advice on Those Debt Consolidation Organizations Out There!

Updated on June 20, 2009
C.W. asks from Philadelphia, PA
21 answers

It has come to my attention that I need to contact one of these groups/organizations to help us with our accumalated debt to help stabalize us financially. I have recieved a couple offers in the mail but I don't want to choose the wrong one to go with. I would like to know how they work and help you consolidate your debts? Do they charge a fee? How much and what is fair? How long does the process take until you can start making one payment? If anyone has any advice it would be greatly appreciated. I just dont want to be one of those people that chose the wrong one and taken for their money. Thanks.

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So What Happened?

THANK-YOU ALL for our much needed advice. I have decided to take the Dave Ramsey route which seems more realistic with just a little work! Thanks from saving me from paying another fee to someelse that I can't afford at this time.

Always, C.

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M.M.

answers from York on

I used a debt consolidation company a couple years ago and got taken advantage of. I paid them like $200 a month for a couple months (can't remember exactly how long) and then they wanted me to save the money myself to pay off the debts! I am still trying to pay those things off even after giving that company $1000 +! Hopefully they have changed since I've used one but just be very careful and do a lot of research! I would ask for references and talk to people who had the system work for them!!

Good luck!

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C.C.

answers from Philadelphia on

Dear C. check out trinity is a christian organization. Also start taking the classes from dave ramsey. Go into his website. Blessings C. he is also a christian

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B.W.

answers from Erie on

Check out Daveramsey.com. Pay the 98.00 and take a Financial Peace University class. It is well worth it, and it will teach you everything you need to know to deal with your debts, resolve the problems without going into MORE debt to do so, and help you get on track to live within your budget and build financial security -- something adding a debt consolodation loan will never do for you.

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D.P.

answers from Pittsburgh on

Please, please, please do NOT do a debt CONsolidation loan. These are bad for your credit. RUN to your library or bookstore and get one of two books: Financial Peace or The Total Money Makeover by Dave Ramsay. His plan is simple, common sense and easy to do. No gimmicks, just a step by step plan for getting out of debt, no matter how IN debt you are. There is no magic wand for cleaning up accumulated debt. No quick fixes. This book will guide you step by step to financial freedom. I promise. Start with the Baby Steps outlined in the book. Check out his website. It will cost you ZERO dollars and it will HEAL and fix your situation, not put a band aid on it, as will debt consolidation. You will be paying that consolidation loan for a loooooong time. This is faster and you control how long it will take yourselves to dig out.

p.s. Don't be fooled by the companies that say they are not profit. That just means that their profit=their salaries.

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L.G.

answers from State College on

Do not use a debt consolidation service. They often do not pay your debts as they should and then you are really screwed. Check out

http://www.daveramsey.com/the_truth_about/debt_consolidat...

A good book is his "Total Money Makeover". It will help lead you out of debt. It's great not to have credit cards or car payments. Anyone can do it, it just may take a while.

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R.G.

answers from York on

C.,

Having gone through this myself, I can say that when the right company is chosen, it can work wonders for your self esteem and for your debt. At the time I was living in OH, and used a local CCCS. But most CCCS' will allow for over the phone counseling and distance participation. The one I used is http://apprisen.com/home/about.html. They charge $25 set up and $25 a month. But depending on your ability to pay, you may have your fees reduced or eliminated. They also offer counseling for residents of PA. I was set up and making payment in less than 2 months after I first contacted them.

That being said, I strongly urge you to consider and look into Dave Ramsey's programs. Either through his Financial Peace University http://www.daveramsey.com/fpu/home/ or through My Total Money Makeover at https://www.mytotalmoneymakeover.com/. They sound more of what you might be looking for. Also the mention of the TODAY show program is excellent advice. A lot can be done on your own to get yourself righted again. But the Ramsey programs will help keep you balanced once you begin.

No matter what you choose, be sure the options feel right for you and you're ready to make dramatic changes in the way you handle your money both now and for the long term.

Best of luck!

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K.R.

answers from Pittsburgh on

C.,
My husband and I used a consolidation company and it really hurts your credit rating. My BIL is a mortgage broker and he told us after the fact the companies look at consolidation almost like bankruptcy. Stay away. I am currently not in a lot of debt, but listen to these ladies on here and you will do the right thing. Good luck

S.Y.

answers from Pittsburgh on

Ack! Run away, run away! (lol sorry, strong feelings there!!)

Dave Ramsey is my HERO. I actually got an entire set of his CDs on Amazon for $10. I'll get them back from a friend if you would like to borrow them. I also wrote my story about how I got my family out of $11,000 debt in 3 months!!!! This is due to what I learned in Financial Peace University. I didn't even take the course, just listened to the CDs in my car. The WORST thing you can do is debt consolidation for your credit for many reasons. One of them is when you start paying on an old debt it kicks off another 7 years it will be on your credit and also reflect badly (read= your score will DIVE down)

Anyone who would like "my story" please pm your email and I will gladly send it to you and answer any questions. My heart goes out to anyone caught in the debt trap and I want to help you get our (and hey, I won't charge you! lol)

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H.B.

answers from Allentown on

About 9 yrs ago my husband and I went through this when I was out of work following the birth of our son. We went through Consumer Credit Counseling Services which is funded by the United Way. Very reputable. There was NO FEE to do this. We paid off our debt in about 3 yrs. and as of today have excellent credit rating. It may have affected our score when we were in the program but now it is great! Our counselor got the comapanies to decrease most of our int. rates and we sent CCCS a money order every month. They, in turn, disbursed the funds to our credit card companies. It was a huge burden off of us at that time. Good luck!

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C.C.

answers from Pittsburgh on

This is a great question! I am looking forward to the responses!

D.S.

answers from Allentown on

Hi C.,

Check with your local Better Business Bureau. They have credit counseling. They may be able to refer you to a reputable organization.

Good luck. D.

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S.A.

answers from Pittsburgh on

Corey
I dont disagree with the other posts,however,I did do a debt consolodation loan a number of years back with CCCP (Consumer Credit Couseling of Pittsburgh) and they only charged $10/mo and they reduced all of my high inteerst loans and lowered my payment by half and I had it all payed off in 5 years. It doesnt ruin your credit it just doesnt allow you to have any credit during that time. Which is wise. Backruptcy is different and takes 7 years to restore your credit back. The payment depends on your debt amount which they went over with me when I met with them at the downtown office.You can look them up on line or in the phone book. I didnt feel cheated or taken the 10/mo was to off set their fees which I thought was fair and I worked the program until I was completed and better off for it today.
I hope that helps!

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T.M.

answers from Allentown on

good morning C.,
Before you go OVERBOARD and 'retain ' someone for help ....Simply DO it yourself .[ free]
In the END of all this crazy stuff .. YOU ; yes YOU and HUBBY have to locate EVERY fixed bill[ elec, water oil] , every credit card , every car payment, daycare, house repairs,the gap, macys etc ......
- place in a folder with all address', name of debt, and balance due .
= calculate total
= go to your local friendly bank [if you really need to] etc ..they have finiancial help peoples too.
= you may simply 'need' an upgraded budget .
= try to work with the numbers ...paper tells the ' real' story with monies ....you may have enough to make it , just re arange your money.
= good luck . I am sure you are ok if hubby still has a job . if not , sell off 1 of the cars [ temp] until you catch up .
Do not panic.. that is when you get in more trouble .
a practicle grammy

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N.S.

answers from Pittsburgh on

YES - Dave Ramsey! Do NOT pay anyone to do what you can do yourself.

A company called Consumer Credit Counseling helped a family member of ours, for free, but mainly just by getting her rates dropped WAY down (and then she had to send them the payment, but there was nocharge from them to her)... BUT that also was a huge "ding" on her credit record, but we had no choice with her, it had to be done, long story but she was not going to do it on her own - the difference being YOU are motivated. You may be able to call and get them to lower your rates yourself - check the Total Money Makeover book out of the library if you can and try it. :-) It worked great for us!!

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H.H.

answers from Harrisburg on

Oh, my word!
We started with $86,000 in debt 'bout 5 years ago, and are down to $9,000. We realized that money problems are not number problems, they are behavior problems - and we had to take responsibility for our behavior. We've bought nothing on credit since then. Nothing. And while the debt consolidation programs work on paper [and I would NEVER pay more than $15 per month if you decide to go with one, which I wouldn't], using something called a "debt snowball" [where you line your debts up smallest to largest and attack the smallest one first, then when it's paid off, add what you were paying on it to the next smallest one, and so on] will give you the momentum you need [and the feeling of winning with your money] that will enable you to wipe out the rest of them quickly.

With complete confidence, we suggest to you Dave Ramsey! He has a lot of super-trust-worthy, simple, tried-and-true advice. Hands down, one of the best! He is full of practical advice, and really cuts to the chase to help you get control of your money vs. your money controlling you.

Wishing you financial freedom - we're on our way! :)

http://www.daveramsey.com
Dave Ramsey's first three "baby steps":

1. Save $1,000 to start an Emergency Fund
2. Pay off all debt using the Debt Snowball
3. Have 3 to 6 months of expenses in savings

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J.D.

answers from Philadelphia on

all I've ever heard is that those aren't good! I believe you can call the companies yourself and negotiate something. Good luck!

M.S.

answers from Pittsburgh on

We got a Dave Ramsey book from the library several years ago and followed his plan. We both worked multiple jobs, cut waaaaaay back and paid off all debt in 5yrs (even our cars and mortgage). I highly recommend his products and radio show. Good luck!

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R.C.

answers from Pittsburgh on

Actually no personal experience, but was just watching the TODAY show a few minutes ago and they were talking about this. they said to work with the companies directly, not to put yourself in more debt by going thru one of those companies. You can get the same or better deal yourself. I think the TODAY show would have a link to the portion with Jean Chetazic (spelling) on their site. Sometimes The Salvation Army has someone who can help you make a budget and figure out which way to go.
God Bless

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L.H.

answers from Philadelphia on

Hi C.,

I have two friends who do this for a living. One is a personal credit coach and the other concentrates on restoring credit. Here are some things they tell me.

Watch Out! Alot of those firms are scams! Some of the supposedly negotiate a settlement to reduce your payments, and then accept one check from you. Some of them take your money and don't even pay your bills for you! You find this out AFTER they have destroyed your credit. Sometimes these firms ruin your credit worse than a bankruptcy, and it takes longer to recover from than a bankruptcy, too. Make sure that whoever you are working with is LEGAL and have been approved by the IRS. My friend, Noelia, said that the firm she works for is the last firm that the IRS has approved since like 2003 or something like that.

Sometimes it is much better to work with someone like my friend, Nancy, the personal credit coach. She does charge a fee, but it isn't as much as alot of these other places charge. She will go over your credit file line by line, work to correct any errors, and then give you an action plan of what YOU can do for yourself to improve your credit score and pay down your debt. My fiance and I used her to get our personal action plan, and we are taking the steps she suggested and taking charge of our money and credit ourselves. Its like going on a diet when you are overweight. If you simply go on a liquid diet or a set meal plan, you don't learn how to eat in the real world. As soon as the external controls are lifted, you begin to gain the weight back. In the long run, it is better to learn how to control yourself, eat smaller portions, and eat real food. I think credit is the same way. If you work with simply external controls to get your debt under control, you won't learn how to control yourself, live within your means, and make wise credit decisions in the future.

If your in so much trouble that you have to act immediately, then go to the Consumer Credit Counseling Service. They are a non-profit and, I believe, will help you for free. Don't get sucked in to those ads and flyers that come in the mail. They are surely scams. In this economy, so many people are having difficulty with their credit and debt that these companies do not need to advertise for business. Both of my friends who work in this field say that they are swamped for work, and are busier than ever.

Hope that helps,
L.

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S.B.

answers from Philadelphia on

I had asked this question myself about a year ago and no one had any info for me. So, I went ahead and investigated as best I could on the internet several companies.

There were two types of things offered. 1)They put all your bills together and you pay them off but it still cost way more than we could afford after I lost my job and my husband lost his part time job. 2)They call all of your creditors and tell them that you have entered in to a program with their company. They will be getting paid but they will negoshiate down to maybe 40% or less of your debt. You are to start a special accoutn where you are to deposit a minimum amount of money every month instead of paying your creditors. The company is to send letters to all of these companies and keep them from making any harrassing phone calls and assure them that they will get their money. But the company takes their cut of the money they want first so several months go by before anyone gets paid.

We signed up for plan #2 with WhiteStar and we continued to have very upsetting calls. My husband had to go to court twice to explain our situation and why we did not pay our bill. (We were not actually sued like the letter said we would be.) But it was very upsetting and he had to take off from work twice. When he contacted Whitestar about it they just told him some things to say and the lawyer from Whitestar that he spoke to was not very professional.

A few of the creditors called and said that they would not deal with a third party and a we tried to explain to them that we were going to be paying them directly from our account and that we were just consulting with Whitestar for help. Well My husband got so annoyed after paying Whitestar $3000 and a couple of the creditors contacted us and offered us half of what we owed them that he quit paying Whitestar and started making his own deals.

I would suggest that if you are in the right frame of mind, that you try to make your own deals. Keep saying no, no, no to the creditors until it is something you can do. Anything is better than going bankrupt and then they won't get anything.

My very best wishes to you. Sandy

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