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Debt Consolidation

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wilmotrogers

WilmotRogers
Joined
Jul 27, 2006
Messages
139
A friend of mine is looking to consolidate some high interest credit cards. You hear all those advertisements on TV, but I know no one that has ever been through this process. Thought I would post this on the forum to see if anyone has had any experience, positive or negative, with any of these companies. If this is inappropraite to discuss on the Forum, I apologize, and please delete. Just figured that with such a broad base of careers, someone may have some insight. Please PM me if you would feel more comfortable to talk about this offline. Have a happy Thanksgiving guys!

Jamie
 
You talking a loan or a credit counseling service?

I did the credit counseling bit in the early 90's. Was a great way to get out of debt without having to declare bankruptcy. It does damage your credit, but not as much as a bankruptcy will. Been real careful with the credit since then and I pay for most stuff with cash or my check card.

My biggest credit problem these days is a lack of open credit accounts. Guess you have to have debt to get credit. :)

If I do not have the money, I don't buy it.

The place I went through was Take Charge America. I think they are still around.
 
If someone is charging a fee to consolidate your friend's debts, have him walk, no make that run, in the other direction.

Have him call his debtors and try to work something out with them directly. He will be amazed at how willing most will be to try and work out acceptable terms. Most folks fear picking up the phone, and making the call due to embarrassment, or whatever. Or if he's too embarrassed to call, have him visit a local non-profit organization that will make the calls for him, but please don't let him go to one of those "Get out of debt now" places that charge a fee, as he will just get in deeper, and stay in debt longer!
 
I think he means he wants to borrow money to pay off his credit card debt. I think he wants to refi his mortgage to accomplish this. You know like a Ditech refinance loan. I would recomend a using local mortgage company in his area if that is the correct assumption on my part. My wife is a mortgage underwriter that is what she would tell or recomend someone to do. She says that a local company will give you a more options abd compete with the advertized national rates. I hope this helps.
 
Burnt Tongue said:
I think he means he wants to borrow money to pay off his credit card debt. I think he wants to refi his mortgage to accomplish this. You know like a Ditech refinance loan. I would recomend a using local mortgage company in his area if that is the correct assumption on my part. My wife is a mortgage underwriter that is what she would tell or recomend someone to do. She says that a local company will give you a more options abd compete with the advertized national rates. I hope this helps.
Click to expand...

He probably needs to be careful if he is refinancing his home to come up with cash to pay these cards off. However its not a bad way to get a lower rate on your debt.

This could suck though if he has plans to sell his house in the near future being the housing market is what it is. He would need to sell it for enough to cover his mortgage and refinance loan too.

Watch on the reappraisal too. If they apprase it too high it could make the above situation even worse.

Hope this helps.
 
Debt consolidation is a joke. Now, the non-prof orgs that do credit counseling are mostly good. Just be careful there.

However, if he can refi and cash out some equity to cover the cards at a much smaller interest rate, and he can lock that rate in for the term(variable rate sucks!!), that would be a fantastic option.
 
Thanks for the replies. From what I am reading hear and from talking to other people, it may make sense to try and negotiate with the individual credit card companies themselves. Has anyone ever done this? If you do not want to post, please feel free to PM me.

Thanks again.

Jamie
 
If you have equity built up in your house, getting a second mortgage is the best option, that way you can consolidate at a lower interest rate and as we all know, mortgage interest is income tax deductible so you pay the after tax cost of finance. If this is a possibility, it is the best option, and I would do as was recommended by Burnt Tongue. He may also want to look into any type of a loan that might be able to be secured with some type of collateral from wherever he does his banking and see what type of rates they have available.

You can negotiate with some credit card companies. Some actually won't let you, I had a company say "no" and then I took my business elsewhere. He can also try a good trick which is to make a couple big payments on his highest credit card then as the offers with 1 year no interest or low interest, etc come through, keep rolling the highest interest rates onto those cards. Then, keep making as big of swings as possible on the highest interest rate credit cards until its paid of, then onto the next etc.....

I would use the consolidation companies as a last resort such as if they are about to shut off the gas and electric and you got the second notice from the lease company about the car payment being late. Other than that, you end up getting stuck in set payments that are a pretty nice amount of interest and even convenience fees that are set up by the company doing this "consolidation".

In the end, given none of us know the exact financial status of your friend I would say he should explore and exhaust ALL options before moving on to credit counseling.

As a finance professional, thats just my humble .02c
 
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