Credit Tips: Credit Card Counseling Service Tips

Posted On: October 1, 2006

Author: broderp
Posted: Fri Oct 01, 2004 2:17 pm
Post subject: CREDIT CARD COUNSELING

Are there any credit card counseling services that are legit and truely work? I ask because how can they get the credit card companies to lower the interest rates, and accept less money, and you the consumer cant?

If you can’t pay the minimum, how do they get the credit card companies to accept even LESS? AND KEEP YOUR CREDIT FROM GOING DOWN HILL?

I ask because I find myself getting out of a bad siduation, and being in debt over $40,000.00 to CREDIT CARDS due to lifes unexpected downs. My family income is only about $65,000.00 a year, and we have a mortgage, car payments (1) and kids (4) as well as obligations from previous lives (child support @ about $575.00 month).

I’m sick and tired of going paycheck to paycheck, I’m not behind in my bills, but that edge is really close, I can see it. I can’t get a home equidy loan as my credit score is only “639″…and thats based apon my DEBT to INCOME ratio. In fact, according to the web site, if I payed off 95% of my debt, my score would be around 740, which is from what I hear a pretty good score.

Is there any hope? the current calculators show that I will be in debt for the next 10 years. My family can not survive this long, as the structure of our family is deteriorating. My wife has gotten a second job, and works close to 75 hours a week. Because of the kids (can’t afford day care) we have to work opposite shifts. She works nights and second shift, while I have to work first. We have a toddler, and he keeps her up all day, so she goes on 2-3 hours sleep a day. I haven’t spent a night with my wife and kids as a family in over 9 years. My ex wife and child support keeps me from getting a second job (child support calculations show I would get to keep only $130 of every $500 I made as my support would go up. It’s not worth taking my kids away from me even more). We have NEVER been on a vaction, either together or as a family and I’ve about had it.

CAN a credit counceling service lower my payments by 1/2, like those TV comercials and radio adds say? and give me the ability to pay more of my daily living expenses so we don’t have to work as hard?

Author: NightStar
Posted: Sat Oct 02, 2004 8:48 am
Post subject: Credit Card Counseling Service Tips

Credit Counseling is considered the same as if you had filed chapter 13 bankruptcy. It is a wage earner plan. And it won’t nessasarily reduce what you are paying, but will reduce the interest rate on the accounts.

You have to pick which credit counseling company you go with carefully, some of them are not looking out for your best interest, and will require an up front fee before they even start paying your creditors. Usually the plans go 2 to 5 years, and you are not allowed to open up any new accounts during that period, plus you will be required to close the existing accounts you now have with the creditors. They will note to your credit report that you are in credit counseling, but that should come off when you are done with the program.

Not all creditors will work with credit counseling companies, so you have to watch the CCCS and follow up with the creditor to insure that they accepted the program, also you have to check on when the cccs will send your payments out, sometimes they only send once a month, thus paying after your due date (and this can default your agreement with the creditor) causing worse problems.

Your credit scores are not bad, I have seen plenty of people able to refinance with them scores, but like you said it is the debt to income ratios that is likely hurting you. I have a friend loan office, I can send your direction to look over what you are dealing with, if you want to check on refinancing direction. He is really good, and won’t sell you, unless you want to go that way.

Likely would not hurt either for you to speak with a bankruptcy attorney, to get idea that direction to for relief, keep all of your options open at this point.

Author: cabledude
Posted: Sat Oct 02, 2004 9:08 am
Post subject: Credit Card Counseling Service Tips

This sounds exactly like me. Had about $60K in debt and made about $80K annually. Made all of the payments, but it was definetly paycheck to paycheck. If I would have gotten sick or been laid off I would have been screwed!

Do you own a home? If so is there equity? If the answer is yes you may qualify for a low interest home equity loan. Much better than paying the CC crooks who have more than likely identified your high debt to income ratio and have jacked your rates up above 20%?

In my case I was young, about 32 at the time, and I had about $120K in a 401K at work. My employer allowed 401K loans up to 50% of the balance or $60K. Since I was young I took about $40K out to get this down to a more reasonable $20K. I worked the rest off over time. You will still have the payment back to your 401K, but at a much better interest rate. The other $20K was then easy to move to another card with better rates as my overall debt to income ratio dropped drastically and my score jumped.

Many folks will tell you this is a bad decision and I think you carefully have to weigh your options. If you are over 40 then you really have to be careful. If you do decide to do this make sure it is a loan. There is no penalty for the withdraw and it insures you have a repayment plan in place.

Keep in mind to make sure you have exhausted all other avenues before dipping into your retirement. This in my case saved me from BK. If you do dip into it make sure you make two promises:

#1 NEVER allow yourself to get that much in debt again
#2 Repay your 401K loan in 5 years or less, this should be doable at your salary.

Good Luck.

Author: Ira
Posted: Sat Oct 02, 2004 5:58 pm
Post subject:Credit Card Counseling Service Tips

Since everybody is trotting out their similar stories, here’s mine:

I woke up one morning in the early 90’s and realized for the first time that I was literally drowning in revolving debt. It was a combination of credit cards and checking overdraft. My new girlfriend (now my significant other) said something to me about this. Both of remember the incident, but neither of us remember what was said.

I went cold turkey on spending. Other than gas which I always paid off the same month regardless, I didn’t touch another credit card for several years. At the same time I discovered the balance transfer concept. Over the next seven years I bounced my debt from one low interest intro rate card to another. During that seven year period I opened and closed some 37 cards. I didn’t even know there was such a thing as a credit score. My ignorance probably helped me since I could worry strictly about paying down my debt rather than what it was doing to some score or other.

I estimate that I probably reduced my payback period by at least five years using these methods. I had charts and tables showing me when one card expired and the next oneto transfer funds to. Yes, it requires dedication, but I’ve been debt free for over three years now and it’s a wonderful feeling!

Good luck to you and let us know if we can be of further assistance.