Debt Elmination Programs
Q: Ok, so, the last 10 years, after starting a new business, I finally got myself up to about $70,000 in credit card debt. The final straw was when one of the card companies raised my interest rate from about 19 to 23 %. i finally realized, i was getting nowhere, and those bloodsuckers had made, in the last 5 years, over $70,000 in interest on my accounts. So, now i am looking into these "credit card" debt elimination programs, advertised pretty strongly all over the web. Naturally, i am not suckered into the spam emails, but am looking for a reasonable and established company to help me get this debt eliminated. restructuring is not possible. lowering the interest level is interesting, and yet, because of a downturn in my business, i am still pretty much unable to service the debt ($1500 to $2000 / month). I do not care if my credit is ruined for 5-7 years. i do not plan on buying any major ticket items, and as for cars, i can always buy used at about $3 to 5k at local dealer auctions. i figure if i start saving - in cash - the $1500 a month i have been paying, in about 6 months i will have some decent cash to start make some settlement offers. i am hoping to settle for between 25% and 35% of my debt. anyone with experience on the debt elimination / settlement programs???
A: Ain't gonna happen. You assume that the cc companies act as you would. They don't. 50% is generally a *great* deal, and you usually have a chance of getting it if you're account is at least 90 days past due. Don't go there. Most "debt elimination" firms are scams who charge exorbitant fees to do for you what you could do yourself without paying thousands in "administrative fees" to these scamsters. Whether you attempt to negotiate settlements with your creditors yourself, or you use these "debt elimination" firms, you'll ruin your credit, and your credit will STAY ruined for seven or more years. Also, note that you'll never get a 25-35% settlement from creditors. You'll be lucky if they settle for half the amount you owe, plus penalties, usurious default interest rates, and fees. (The reality is that you'll probably be made to settle on 70-75% of the original amount owed before default.) Your single best option to eliminate your debt permanently? Assuming you don't have much equity in a home, or any expensive automobiles, that would be Chapter 7 Bankruptcy. Liquidation. Full discharge of unsecured (i.e., CC) debts. Good lucks. While you wait and default for a settlement, your CC interests, late penalties, and over the limits penalties (if applicable) will continue to pile up. They are not going to stop. Your outstanding debts are not going to stay the same during this time. Your debt will go up quite a bit. Your monthly saving of $2000 can barely cover the interests (23%) of your total debt ($70,000) during that time. That amount of the monthly saving is not going to get you anywhere. Oh sure, they promise to work with your creditors, but "forget" to tell you that (while you are making payments to them) some of the creditors (Citibank, for one) refuse to work with them. So while you are thinking you are finally making progress, Citibank reports you months late, destroying your credit report and hounds you into bankruptcy while you wonder what happened to the money that all this time..... Ask me how I know. Oh yea, and I worked with Ameridebt, Neway, and Money Management International. And they all promised the sky and just delayed my realization that Chapter 7 was the only way to go, if I knew then what I know now, I'd have saved a few bucks and filed early so I could start my road to recovery that much quicker. I had a friend who was $25,000 in the hole and was working a minimum wage job. He enrolled in one of those and -- guess what? -- two CC companies refused to work with the debt consolidator. He sunk a good percentage of his income in that scam and then went bankrupt.
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