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Debt Settlement?? SOo much credit card debt



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amother
Ivory


 

Post Wed, Jan 09 2019, 12:53 am
We went through a really rough patch, financially, over the last few years. During that time, we've accumulated a lot of credit card debt. We are doing ok enough that we aren't using credit cards anymore, but not well enough that we can afford to pay them off. We've been paying the minimum payments and I feel like we're just wasting so much money and it will take a lifetime to pay it off.

BH, we fully own our home and cars, so we aren't making payments on those and this credit card debt is the only payments that we need to make.

Do you recommend a debt settlement service for such a situation? Why or why not?
Have you used a debt settlement service? What was your experience?
Is there a particular company that you would or wouldn't recommend?
How will this impact my credit score? (A concern, but I do own my home and cars, so not the end of the world.)

Thank you in advance for taking the time to respond.
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ellacoe




 
 
    
 

Post Wed, Jan 09 2019, 2:17 pm
I refer to JoeB at Angels of Debt. The clients I have sent there have been very satisfied.
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amother
Firebrick


 

Post Wed, Jan 09 2019, 2:24 pm
amother wrote:
We went through a really rough patch, financially, over the last few years. During that time, we've accumulated a lot of credit card debt. We are doing ok enough that we aren't using credit cards anymore, but not well enough that we can afford to pay them off. We've been paying the minimum payments and I feel like we're just wasting so much money and it will take a lifetime to pay it off.

BH, we fully own our home and cars, so we aren't making payments on those and this credit card debt is the only payments that we need to make.

Do you recommend a debt settlement service for such a situation? Why or why not?
Have you used a debt settlement service? What was your experience?
Is there a particular company that you would or wouldn't recommend?
How will this impact my credit score? (A concern, but I do own my home and cars, so not the end of the world.)

Thank you in advance for taking the time to respond.


You don't have a mortgage, but you're paying high credit card rates?

Consider a HELOC or second (actually, first, just not purchase money) mortgage, which will be at a much lower rate, and allow you to pay off your debt more quickly.
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simba




 
 
    
 

Post Wed, Jan 09 2019, 2:29 pm
Debt consolidation should be looked into before debt settlement.
heloc mentioned above is likely the cheapest loan.
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amother
Magenta


 

Post Wed, Jan 09 2019, 3:39 pm
Please be really careful with these services.
Years back dh used one and it destroyed his credit score. Also the company kept missing payments (!) so we got more late fees and into a huge mess.
I can't recall which service he used but not all are reliable.
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amother
Aqua


 

Post Wed, Jan 09 2019, 4:28 pm
Best is to call the cc companies directly. You have to speak to a manager or someone higher up.
Tell them it’s difficult to pay and you want to pay it off. Request they lock the card and lower the rate between 0-6%. They set up a monthly payment plan at this rate. If you are late more than once they will take you off this plan. This does not affect your credit score as you are agreeing to repay the debt. You are just asking to lower the interest rate.
They try to make the payment amount based on what you say you can afford and also that it should be fully repaid within 3-5 years (depending on the specific card.)
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amother
Seagreen


 

Post Wed, Jan 09 2019, 4:35 pm
I know nothing about this but wouldn't taking out a mortgage on your house make the most sense?
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SesameSeeds




 
 
    
 

Post Wed, Jan 09 2019, 4:40 pm
I would try to look into consolidating debt first and get 0% APR Cards if you dont have that yet. I actually went through a very similar situation and I just got some cards so I have some knowledge with that. You can PM for more info.
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peacenine




 
 
    
 

Post Wed, Jan 09 2019, 5:22 pm
amother wrote:
We went through a really rough patch, financially, over the last few years. During that time, we've accumulated a lot of credit card debt. We are doing ok enough that we aren't using credit cards anymore, but not well enough that we can afford to pay them off. We've been paying the minimum payments and I feel like we're just wasting so much money and it will take a lifetime to pay it off.

BH, we fully own our home and cars, so we aren't making payments on those and this credit card debt is the only payments that we need to make.

Do you recommend a debt settlement service for such a situation? Why or why not?
Have you used a debt settlement service? What was your experience?
Is there a particular company that you would or wouldn't recommend?
How will this impact my credit score? (A concern, but I do own my home and cars, so not the end of the world.)

Thank you in advance for taking the time to respond.


I don't have experience on this topic but check out Dani Johnson's war on debt. Its a system that you implement to pay off ur debt.
She writes it in detail in her book First steps to Wealth and has videos about it on YouTube and her site www.danijohnson.com
Best of luck
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amother
Green


 

Post Wed, Jan 09 2019, 6:11 pm
amother wrote:
Please be really careful with these services.
Years back dh used one and it destroyed his credit score. Also the company kept missing payments (!) so we got more late fees and into a huge mess.
I can't recall which service he used but not all are reliable.


Debt Settlement typically kills a credit score - no matter who you use.
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SixOfWands




 
 
    
 

Post Wed, Jan 09 2019, 6:19 pm
amother wrote:
Debt Settlement typically kills a credit score - no matter who you use.


Of course it does; you're paying back less than you owe.

And there's no reason for it here, as the OP has very substantial assets, even if they're not liquid.
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33055




 
 
    
 

Post Wed, Jan 09 2019, 6:34 pm
amother wrote:
You don't have a mortgage, but you're paying high credit card rates?

Consider a HELOC or second (actually, first, just not purchase money) mortgage, which will be at a much lower rate, and allow you to pay off your debt more quickly.


Seriously???

You would take unsecured debt and secure with OP's home???

OP go see a bankruptcy attorney who can advise you about your debt in relation to your assets. Where are you located?
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amother
Ivory


 

Post Wed, Jan 09 2019, 7:54 pm
Squishy wrote:
Seriously???

You would take unsecured debt and secure with OP's home???

OP go see a bankruptcy attorney who can advise you about your debt in relation to your assets. Where are you located?


In NJ.
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amother
Aubergine


 

Post Wed, Jan 09 2019, 8:02 pm
If you settle you have to pay taxes on the amount that is forgiven by the cc.
Rather discuss a payment plan with the cc company. And if you get a 0% offer for a new card then consolidate and transfer.
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Amarante




 
 
    
 

Post Wed, Jan 09 2019, 8:38 pm
As others have stated, DO NOT take out any kind of loan on your house to pay off credit card loans.

What is your financial situation that you can only pay off the minimum. I ask because there are ways to pay off your credit cards completely if that is your goal by stringently cutting expenses to the bone. For example, Dave Ramsey has this kind of advice. You work on paying off the highest interest card first and then work on the others.

You can check out credit cards where you transfer funds and it's either no interest for a period or low interest. You have to read the fine print to make sure there are hidden costs or traps though.
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amother
Lilac


 

Post Wed, Jan 09 2019, 8:44 pm
Amarante wrote:
As others have stated, DO NOT take out any kind of loan on your house to pay off credit card loans.

What is your financial situation that you can only pay off the minimum. I ask because there are ways to pay off your credit cards completely if that is your goal by stringently cutting expenses to the bone. For example, Dave Ramsey has this kind of advice. You work on paying off the highest interest card first and then work on the others.

You can check out credit cards where you transfer funds and it's either no interest for a period or low interest. You have to read the fine print to make sure there are hidden costs or traps though.



I'm not an expert but I don't understand why it's a bad idea to take out a loan against the house. I get that the cc debt is unsecured and a home loan is secured. That being said most people have mortgages and home equity lines that are secured. It's perfectly normal. Also, if the op is swimming in high interest cc debt of 75k, she is paying massive interest and is throwing money down the drain. A home equity loan can be over 30 years at a very manageable low interest payment of a few hundred a month. Why is this crazy?
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amother
Green


 

Post Wed, Jan 09 2019, 8:45 pm
amother wrote:
I'm not an expert but I don't understand why it's a bad idea to take out a loan against the house. I get that the cc debt is unsecured and a home loan is secured. That being said most people have mortgages and home equity lines that are secured. It's perfectly normal. Also, if the op is swimming in high interest cc debt of 75k, she is paying massive interest and is throwing money down the drain. A home equity loan can be over 30 years at a very manageable low interest payment of a few hundred a month. Why is this crazy?


What do you think happens when you can't pay back debt that is secured by an asset?
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Amarante




 
 
    
 

Post Wed, Jan 09 2019, 8:49 pm
The reason why you don't want to take out a loan on your home to pay back credit card debt is because if the worse happens, you can walk away from credit card debt and still have a roof over your home. Your creditors can pound sand but your home is safe. At worse, you have taken a hit to your credit score but you own your home free and clear both as shelter and as a real asset that should be kept safe.

Once you have placed a lien on your home, you can then have the debt foreclosed on and the home would be lost.

Also - and I am not saying this is true of OP - but once people have paid off credit cards, it is tempting to run them up again. Perhaps I am overly cautious as MANY people lost their homes because they had refinanced their homes during the boom in the years prior to 2008 and lost their homes in foreclosure.

There are credit cards with less usurious rates and OP should see if she can transfer from higher rate credit cards to another.

ETA - Also the OP needs to really understand why she ran up such high credit card loans and how has her financial situation changed. Was it a once in a lifetime thing like medical emergency or was it because her income wasn't high enough for living expenses. If the latter, then what is preventing her from accumulating more debt if her income isn't high enough for normal living expenses.
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pecan




 
 
    
 

Post Wed, Jan 09 2019, 9:00 pm
Why not open a few new credit cards with 0% interest for 18 months? We get these in the mail all the time. You pay off as much as you can, then open a new one when the 18 months are up. You do need a plan to pay it off, this is just easy and gives you more time.
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