How do the credit card consolidation/negotiation companies work, and how do they get paid? I have a card we owe about 45000 on and do not see us paying it off anytime soon. We are current on it but I have been toying with the idea of doing some kind of debt negotiation on it so we can just lower the payments and pay it off over time...from what i have read it seems like they will take over the account....not pay on it for 3-4 months...then call them to start negotiating....am I wrong..???
If you have been paying on time, call them up and tell them that you would like to get a reduced interest on your credit. If they say NO ask to speak to a manager. You can also say you are going to have to do your business elsewhere as you have been offered a CC for a lot less of an interest rate. If this does not get them to drop the rate, then the only way I have found they will negotiate is you not paying for three months, THEN you can negotiate a lot less in interest, or even get a lot off. From my experience I got Discover to take 1K off a 5K debt, and also reduce the interest rate to 9 percent. I got Bank of America, to take off 1500 on a 9K debt and NO INTEREST for one year. Now both have been paid and have positive status, so it can be done. Unfortuntely you have to not pay for awhile and then they will negotiate. I would not go to a debt settlement place YOU are much better off doing it yourself unless IMO. Start calling to try to get your interest rate down anyway. Amazing how much less you will be paying and how fast you will be able to pay it off. Woofer
I would think a 3rd party that can lower the debt up to 50% would be a better way to go plus they arrange a payment plan.....I just dont know how much they charge.
The only advantage to a 3rd party is (perhaps) less emotional negotiating. Remember, these outfits do need to make money, and since you have only a fixed amount, the creditor is the one who loses. So, use that to your advantage in negotiating with your creditor. Creditors do have "hardship" programs, but they do keep these quiet for obvious reasons. Speaking directly to your creditor, and a knowledgeable person, may be your best option. In short, "cut out the middle man"...
A lot of these companies charge large "fees" that they take up front. They will not pay the creditor for 3-4 months, and all of those late pays are on your credit report. You now have damaged credit and are out all of the fees that they charge. You could have taken that money and paid it on the account and be better off. A lot of times the 50% reduction is only after it's gone to collections and you make a settlement, which you can do if you want to ruin your credit. If it sounds too good to be true, it probably is. I'd stay very far away from them. Take any extra money you'd pay them and pay it on the debt.
My hubby negotiated one of his cards they gave him 5% interest but he had to quit using the card, he wasnt behind on the payments yet but close. he suffered paycut at work because of economy. They called it a hardship plan will this ruin his credit?
Do not ever go with a third party simply because they do not care about your credit they care about your money and to drag your case month after month. And their result is not as guaranteed as they say it is because they wrote the terms and condition for their guaranteed. They will assign a person (some times called financial advisor some times our attorneys!) near where you live. First scam is you have to pay some fees upfront and if you donâ??t have a copy of your credit report, you have to pay them for a new one or sometimes enrolling in a monthly subscription for obtaining your credit report. After THE person reviews your case, they drag your case month after month and they say they are working on it. You never know how many 30-days late 60-days 90-days late you end up with and they say that's all we offer if you want you can pay again every month again and we can look into it. If you ever decide not to pay, they will leave a 30 and then 60 and then 90 days on your credit report which lowers you credit score and stays on your credit for 2 years. If you decide to settle your debt with them, they close your account (which again lowers you CS) and then after you are donâ??t paying them, it shows as "Legally pain in full " instead of "Paid in full" which will show to future creditors that you did settle your debt with a company and that does not look good plus stays on your credit as a closed account. My opinion, if you want better payment history, better credit and less hassle just keep on paying them and as others mentioned try to lower the interest.
You can do this yourself. You must be willing to accept a blemish on your credit in exchange for money. You must put up with a bunch of phone calls and be good at telling your sob story. I am only about 60-90 days late and I'm getting settlement offers from 20-40% off. But I am massively in default on many cards, and they know it. Might not work nearly as well for 1 account. I would not pay anyone to do this. It is not so much a "negotiation" it's just offered to you if they think you're on the road to BK.
