First, I'd like to say what a great resource finding this site has been. The members of this board are excellent for providing advice and past experiences. My question is in regards to theses "Debt Settlement Companies". I have read enough on the board to know to steer clear of "AmeriDebt" and other Debt Consolidation Companies. What I haven't seen discussed is companies offering to settle debt with creditors. Many discuss settling debt directly with creditors, but I was wondering whether anyone has experience using a company to help do this. Two that I have been looking at are: http://www.nomorebaddebt.com/ http://www.expertdebtconsolidation.com/ Expert Debt Consolidation takes a fee 15% of your total debt to settle with CC companies. You have to pay them this over the first year, but all other payments you save yourself until you are ready to settle. They claim that they bundle a group of accounts together and then seek settlement for all of these accounts at once. They are saying that because they can bundle a large number of debt, and accounts that they can generally get 40% settlement from the major credit cards. ??? As you can guess, I am a bit skeptical of using any of these companies after reading some horror stories. I don't mind paying a small fee for them to handle the actual settlement. I have read that you can do this yourself over time, but perhaps they do have more experience and leverage power. Has anyone used either of these companies? Is this a good idea, or are they another scam? --------- I can outline my situation if it helps any of the experts on the board. I'm currently about $33,000 in debt to about 6 different credit cards. I'm only a month or 2 past due on them. American Express has sent my debt over to a collection agency who I have been dealing with for about 6 months. I am sending a monthly payment to them, but it's getting harder financially. They have not reported anything to my credit report. I can barely make the minimum payment to each card, and know that this will not change anytime soon. I would like to eliminate the debt, but obviously don't want to totally damage my credit. To make things interesting, all debt is US Credit Cards, but I now live in Australia. I'm not sure about what legal rights I have being an American Citizen living abroad, or what the Credit Card companies can do to me. My thoughts were to: 1. Stop making minimum payments to my credit cards, and start saving until I have enough to make a settlement offer. This would hurt my credit rating, but I think I can have them remove negative info once I have settled, right? 2. Settle with first CC in about 6 months. Meaning no payments would go to any CC during this time. 3. Settle with last CC in about 3 years. That's how long it will take me to save the money to pay off each credit card at about 40%. During this time, I am guessing that they will take on tons of late fees, overlimit fees, etc. and eventually transfer my debt to a collection agency. I realize that getting any kind of loan, etc. for the next 3 years is out of the question, but it's not really a concern since I am living overseas. After the 3 years and I have settled with all, will my credit be in good standing? Sorry this is a lot to swallow, but I thought I'd throw it all out there and see what people thought. Thanks for any advice or shared experience!! Zaius
I can share my experience with debt settlement. I was unable to make my monthly payments, and under tremendous stress, so I just quit paying and ignored my creditors. A few months later when things got better and I was ready to face the damage I had done, I saw something online about debt settlement and I checked into it. I ended up signing up. I paid ALOT of $$ in fees to the company that signed me up. I had four accounts at the time I defaulted. I settled three of them through the debt settlement agency. Then, last Aug, the Federal Trade Commission went in and shut them down. I lost the money I had being paying to go towards my last debt--doubt I will ever get it back. They were shut down for making false claims (that they could repair credit) At one point I told my counselor I was ready to quit (after my third account was settled) She told me they should be able to settle by the beginning of summer. She told me it was better to finish the program because their legal department would clean up my report and I would have no baddies. So I stuck it out---and ended up losing! I have read horror stories about people's experiences with this company. Mine wasn't that bad, but if I had to do it all over again, I wouldn't. Long explanation, hope it helps your decision katcar
I will also add that, though I was hassled by CA for a while (boy do I wish I had know about this site THEN!), all of my accounts have remained with the original creditor. katcar
There are very few things that are worse on your credit than bankruptcy. Using a debt settlement company is one of them. I've seen the after-effects. They are rip-offs. They make promises they can't deliver, they charge huge fees, and most of the people that try this leave the program in much worse shape than they started. I could write a book...but that pretty much sums it up.
Re: Re: Debt Settlement Programs Yep. I got some hate-mail from them once after I posted something that was anti-debt negotiation on another message board. Why do you ask?
Re: Re: Re: Debt Settlement Programs They took my MIL. Even managed to get her sued by one of her creditors who placed a lien on her home.
Re: Re: Re: Debt Settlement Programs Sounds like I should stay away from edge solutions. Anyone have experience with the 2 companies I mentioned. Good or bad? http://www.nomorebaddebt.com/ http://www.expertdebtconsolidation.com/ Any thoughts on whether I should just not make minimum payments to my CC's until I can offer a settlement. And do it all myself? How long will a CC be willing to wait until I can make a settlement offer? Is 3 years, unrealistic? I know that my credit report will suffer, but don't want them sueing me in the mean time. Thanks for the info. Zaius
Re: Re: Re: Re: Debt Settlement Programs Sounds like they work about lke the others including Edge solutions. ===================
Re: Re: Re: Re: Debt Settlement Programs I'm sorry for her then. She has my sympathy. They put out a really good pitch, a lot of people get suckered that way. Zaius, with debt negotiation, it's not about finding a good company. They're all bad. Its a bad idea, it will trash your credit like nothing else can, it will cost a lot of money, and you risk getting sued. Their plan is this: 1) You stop paying your bills. Just stop. No calls, no explanation, you just stop. 2) The money you would use to pay your bills goes into a separate account. Typically the debt negotiation company will take maybe two months worth of payments as one of their fees. This will be on top of a set up fee you've already been charged. 3) When money builds up in your account, they start calling your creditors and offering settlements. Creditors often settle past due or collection accounts figuring that something is better than nothing. When they do settle one, they charge a percentage of the "savings" as another fee. Some problems with the system: 1) You can't make minimum payments while you're doing this. Creditors won't settle accounts that are up to date. The plan depends on your letting these accounts go into collections. 2) While most creditors will accept settlements, not all of them do. Settlement guidelines are a matter of strategy that each creditor decides for themselves, and some choose not to settle at all. 3) If/when they do settle, late charges, finance charges and over the limit fees have accumulated on the account. The settlement is often higher than the balance was to start with, yet the settlement company will still charge you their percentage of the "savings". 4) You run a strong risk of getting sued. The debt negotiation companies down play this risk, some even hint they have lawyers that will defend you, but the truth is the decision to sue is up to the creditor, and if they decide to, it's not the debt negotiation company's problem. I could go on and on, talk about their deceptive advertising, the half-truths and lies they tell to pitch their service, the damage they do to your credit...but the bottom line is don't do it. If you think you may be in a position where you would consider it, look at other options.
Re: Re: Re: Re: Debt Settlement Programs Their plan is this: 1) You stop paying your bills. Just stop. No calls, no explanation, you just stop. 2) The money you would use to pay your bills goes into a separate account. Typically the debt negotiation company will take maybe two months worth of payments as one of their fees. This will be on top of a set up fee you've already been charged. 3) When money builds up in your account, they start calling your creditors and offering settlements. Creditors often settle past due or collection accounts figuring that something is better than nothing. When they do settle one, they charge a percentage of the "savings" as another fee. Mycroft ================== Say you have 5 creditors. They have you paying 200 dollars monthly in to their firm. They hold this 200 in an account for you till the account builds up to the amount needed to negotiate a reduced settlement with one of the 5 creditors. Say the amount need to settle with that one is $2400. At 200 monthly this will take 12 months to acquire the 2400 bucks. This means that during this entire 12 months not one of your creditors is receiving one thin dime. Chances are that one or more of the 5 creditors will sue you before you ever accumulate the 2400 dollars. This is what happened in my MILs case. The END ************************* LB 59
