Hello, I just stumbled across this messageboard and I'm hoping someone out there might be able to help me. I have about 25,000 of unsecured debt and I'm in way over my head. I'm not behind on any of my payments yet but I can see that coming in the near future. I am talking with someone at NDN (National Debt Network) about beginning a debt settlement program but I'm worried that it might be a mistake. It all sounds good on paper - they said they could probably negotiate 40% settlements on my debts (but they don't "guarantee" anything) and get my debts paid off in 3 1/2 years. It just sounds too good to be true. I'm worried that since my debts will still be accruing interest (one of my credit cards is $19,000) that if I don't get a good settlement within a reasonable amount of time (it's going to take me a while to save up some money while paying them their fee), that I'm going to be in worse shape them I am now. Has anyone out there done this and what kind of settlements did you get? Is 40% realistic? What kind of problems did you have? I realize that I'm probably going to be receiving calls from collection agencies but NDN said to tell them to contact them. I'm supposed to get back with them today on whether or not I want to sign up so any help would be appreciated! Nicole
My advice is don't do it if there is some other way to handle it. Any compromise in the amount owed will end up on your credit report and will have a negative impact. Although it is difficult to say what you should do without more specific information about your situation, a few things to look at what would be trimming your budget, taking a second job temporarily, getting a consolidation loan at a lower interest rate with lower total payments, applying for a card with a low balance transfer rate such as citbank or at&t universal. This may be difficult if you are maxed out. Then close all accounts you don't really need. If you own real estate, you might consider a home equity loan because these have very attractive interest rates and you could stretch out the payments over a longer period of time. Do you get a large tax refund each year? If you do raise the number of exemptions you claim so that you increase your take-home pay. Why let IRS use your money interest-free when you could use the money now? Look at the interest rates on your cards. Negotiate interest rate reductions with each creditor. Then pay the minimum on each card except the one with the highest rate. Put all surplus cash into paying off that card. Then do the next highest, etc. Above all, stop using the cards. Hope this helps and good luck!
Thanks, Dave. I'll consider what you said. I hate to ruin my credit my a debt settlement but I'm afraid it's going to get ruined anyway if I can't make my payments. I got a home equity loan a couple years ago to pay off all of my credit cards. The problem was, the payments were lower and helped for a while but before I knew it, I had charged up my credit cards again (big mistake), now I don't have any equity left to borrow against and a loan payment on top of my credit card debts. I wish I could get a second job, but my husband works long hours and we have 2 small children who need taken care of. Raising my tax exemptions might help but we usually use our tax return every year to make improvements to our home. It's something to consider though. Thanks again for your advice, <br> Nicole dave wrote: ------------------------------- My advice is don't do it if there is some other way to handle it. Any compromise in the amount owed will end up on your credit report and will have a negative impact. Although it is difficult to say what you should do without more specific information about your situation, a few things to look at what would be trimming your budget, taking a second job temporarily, getting a consolidation loan at a lower interest rate with lower total payments, applying for a card with a low balance transfer rate such as citbank or at&t universal. This may be difficult if you are maxed out. Then close all accounts you don't really need. If you own real estate, you might consider a home equity loan because these have very attractive interest rates and you could stretch out the payments over a longer period of time. Do you get a large tax refund each year? If you do raise the number of exemptions you claim so that you increase your take-home pay. Why let IRS use your money interest-free when you co....
Dave, that was fine advice, ESPECIALLY the part about not using her credit cards any more. However, I differ on the matter of closing the accounts she doesn't really need. She needs open accounts to keep her utilization ratio low, which would help her get some new offers with low-rate balance transfers. Open accounts plus self-control would probably yield better results than hastily closed accounts.
Dave and RichGuy are correct on their advice try to aviod National Debt Network I think that is the wrong route to take. If you don't want to destroy your credit rating what you need to do is take your smallest debt and pay it off by doing this it will be paid the quickest and you can use that money to pay the second smallest quicker and so on. This might cost you more money in the long run but at least you will have the smaller bills off your back freeing up some cash. Do everthing you can possible to budget and to raise money If you can't work maybe offer to babysit or some other at home work for extra money to tackle your debt. Don't be afraid to cut coupons and cut out some of the luxury items such as cell phones, health club memberships, manicures, starbucks, eating out at resturants, etc. until you can get caught up. Cut up those credit cards. Keep ONLY 1 that you like the best keep all your accounts open when you close your accounts creditors can have a field day on your interst rate meaning if you have an 15% credit card if you close that account they can jack up the interest rate to whatever they please. Also you can go to CCCS which is Consumer Credit Couseling their located everywhere and they will give you a free consultation you don't want to sign up with them unless you really have to but at least go in and discuss your situation maybe they can give you some free advice on how else to handle what going on in your life and guidlines on budgeting. If you sign up with CCCS it will destroy your credit rating just go in and have a meeting with your situation. Their is no obligation to have a free consultation with CCCS. But do not sign up. Good luck let us know whats happening Mick
Mick - that was excellent accurate advice. CCCS pulls your cards back, and reports on credit rating. Chapter 13 has the same impact actually. THX Mick - Dogman
