Ask Bill your personal finance question

Advice on credit and debt help

What kind of a percentage reduction can I expect from credit card companies? I was prviously enrolled in a debt settlement prog

Hi Bill. I wanted to know what kind of % i can get the credit card companies to take of the total amount. I have about 10k in credit dept. 1 card is 900, 2nd 1100, 3rd 2000k and the 4th is 5800 and the apr on it is a killer i been in collections and the was with on a program but they charged a huge fee so the payments where really small on the cards it helped but when i lost my job i could even pay them. Now i have a new job and making about 2400-tax a month so i was going to try to pay them off as quick as quick as possible. So i was trying to see how much i can take off so i dont have to pay for all the fees they charged me.

Read full question
Bill's Answer
4.1
/5.0
(7 Votes)

Bills.com | Find Learn Save

Thanks for your question. It is really difficult to put a number on the amount that the creditors will be willing to reduce your debts by, because it depends on the kind of program you were enrolled in previously and your mix of creditors as well. There are a variety of firms out there offering debt settlement and other forms of debt consolidation. Bill is friends with the folks at Freedom Debt Relief. They are a good organization and are members of the Better Business Bureaus. They can be reached at:

1-800-544-7211

www.freedomdebtrelief.com

I highly recommend that you get a free consultation from them. A friendly debt consultant will be happy to answer your questions and evaluate your alternatives for free. Generally, I would make sure that any firm you choose is a member of the Better Business Bureau and get a sense for the quality of the organization (www.bbb.org )

If you are curious about all of your alternative solutions, I'll outline a few below. Since debt consolidation comes in many forms, it is important that each consumer reflects on what their needs and concerns and financial situation is before signing up for an online debt consolidation program. The four primary concerns for most consumers are: i) monthly payment, ii) time to debt freedom, iii) total cost, and iv) the credit rating impact of the consolidation program. Be sure to evaluate each program, relative to your prioritization of these factors.

Credit Counseling

Credit counseling, or signing up for a debt management plan, is a very common form of online debt consolidation. There are many companies offering online credit counseling, which is essentially a way to make one payment directly to the credit counseling agency, which then distributes that payment to your creditors. Most times, a credit counseling agency will be able to lower your monthly payments by getting interest rate concessions from your lenders or creditors. It is important to understand that in a credit counseling program, you are still repaying 100% of your debts ? but with lower monthly payments. On average, most online credit counseling programs take around five years. While most credit counseling programs do not impact your FICO score, being enrolled in a credit counseling debt management plan DOES show up on your credit report? and, unfortunately, many lenders look at enrollment in credit counseling akin to filing for Chapter 13 Bankruptcy ? or using a third party to re-organize your debts.

Debt Settlement

Debt settlement, also called debt negotiation, is a form of online debt consolidation that cuts your total debt, sometimes over 50%, with lower monthly payments. Debt settlement programs typically run around three years. It is important to keep in mind, however, that during the life of your debt settlement program, you are NOT paying your creditors. This means that a debt settlement solution of online debt consolidation will negatively impact your credit rating. Your credit rating will not be good, at a minimum, for the term of your debt settlement program. However, debt settlement is usually the fastest and cheapest way to debt freedom, with a low monthly payment, while avoiding Chapter 7 Bankruptcy. The trade-off here is a negative credit rating versus saving money.

Debt Consolidation Loan

Many people think first of a debt consolidation loan when seeking online debt consolidation. This option typically means a second home loan (or home equity line of credit) or refinancing your primary mortgage. In a debt consolidation loan, you exchange one loan for another. The most frequent form is taking out a mortgage loan, which carries a lower interest rate and is tax deductible, to pay off high interest rate credit card debt. It is important to be aware that shifting unsecured debt to secured debt can create a volatile situation, if there is ever a chance that you cannot afford the new mortgage payment you are now putting yourself at risk of foreclosure! In the case of a debt consolidation loan, most mortgages are 30 year loan, which means that the total cost and the time to debt freedom could be very high? but the monthly payment will be lower than other options and there is no credit rating impact. Only people with good to perfect credit who own homes should look into debt consolidation loans

Net-net: while there are many forms of online debt consolidation, consumers with high credit card debt and poor credit may want to explore debt settlement or debt negotiation. However, each consumer is different, so find the online debt consolidation option that fits for you.

Bills.com makes it easy for you to apply for qualified providers of debt help, by following this link: https://www.bills.com/debthelp/debt/

I hope the information provided has helped you Find. Lear. Save!

Best,

Bill

www.bills.com

Get Debt Help!
4.1
/5.0
(7 Votes)

People also like to Read

Brad Stroh

Credit card debt | Get out of credit card debt for good with help from Bills.com. Find debt resources and information in one ... Read more >>

Daniel Cohen

American Express | If you have a large American Express Bill and AMEX Debt, Bills.com gives you the advice you need to save m... Read more >>

Betsalel Cohen

How to get rid of credit card debt | Make the decision to get out of credit card debt faster. No matter your financial positi... Read more >>

Betsalel Cohen

Credit Card Relief Programs | Free tips and advice, so you save money and find the right credit card relief program for your ... Read more >>

0 Comments

1500 characters remaining
loading...