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WOW...........that's a big ugly can of worms.
One of the things I'm glad I did when my daughter was sick.......was pile up all of my bills, find a reputable credit counseling service and stop the bulls(*&t.
I think it was Consolidated Credit Counseling Services. They stopped all late fees, negotiated lower payments until we got caught up and got my interest rate lowered. I think there was a $29 monthly fee.
I paid all of it (around $80K) off in 15 months and it was not a problem
Try this place.
http://www.consolidatedcredit.org/?PartnerID=1140#
You must be extremely careful here....Some companies will enroll you, compile all of your debt, charge you the full amount and then settle with the creditors............in effect leaving you with a long list of "Charge Off' and "Negotiated settlement" entries on your credit report.........................................if that's the case you might as well have filed for Bankruptcy.
One clear sign is if they insist on enrolling all of your debt. That's because they are going to make more on the settlements if you enroll more debt.
Two side notes:
a. Someone will probably come along and give you the Dave Ramsey party line about debt consolidation.....................if Dave Ramsey admitted that some companies were ok? he would probably cut his sales in half.......so take it with a grain of salt.
b. Once you enter, whatever accounts you enroll will not be available for your use.
If it's credit cards, find the local version of Consumer Credit Counseling. They're a non profit and have no fees. No Cost. Not sure if they're state or national sponsored. Won't eliminate debt, but will have the credit card companies work with you on payments. Usually the card account is terminated and no additional interrest or fees are added as you pay off the outstanding balance. Vic
I'm with VMackey, Consumer Credit Counseling. Using one of the debt consolidation companies can hurt your credit as badly as a not paying at all.And take a look at this site first.
http://tinyurl.com/qelf83
Edited 9/12/2009 7:34 am ET by florida
+1 on using CCCS. It's not really debt consolidation, though--that would be borrowing money from a new source, paying off all of the old accounts, and having just the one, new account. IMO if you want to do that, borrow against your principal residence so you get a tax benefit on the interest. Don't do this if you're in any danger of not paying, of course.
There is money in selling a person money...credit cards, loans, mortgages, etc.
There is money in selling you savings...retirement, bonds, CDs, etc.
There is no money in selling debt relief, its all knowledge based, no real product, no ongoing commissions so you have to be careful. I'm in a different country so I can't speak to who to contact but:
Most folks worry about the interest rate and the monthly amount. If you make your first priority the terms and conditions and concentrate on eliminating the time factor you can do wonders. Almost regardless of interest rate or $ amount put to it.
Using your real estate as the leverage in a consolidation and then structuring that loan so that you can defeat the time portion of the amortization schedule works well.
Very well, in fact, its the heart of Manulife's ManuOne program. The Australian Credit Union model uses the same philosophy. As do the truly wealthy. So, its not a fly by night process. Math based, not emotion, not fee for service, not ongoing commissions, just you, a mortgage and a little knowledge.
I'd be happy to fully explain the process, in general, to anyone. Once you have that, spend a hundred bucks and run it past your accountant. I will *not* address specifics or individual cases. Way too long to post here but an email with a Word attachment will do the trick.
metaxa (at) telus (dot) net Put FHB in the subject line so I don't trash can anything, please.
No magic, no tricks, just math. You can do it yourself with no fees, no new money borrowed and no hit to your credit score. But you have to be proactive, not deep in doo doo to start.
Are you saying use your equity to refinance and put the debt ito your morgage?
We did just that after a major remodel and it has worked for us, but I wonder if the current market would allow you to pull it off. Mike
Small wheel turn by the fire and rod, big wheel turn by the grace of god.
The "trick" is to then structure that mortgage such that less money (than you were paying out prior) pays the mortgage down faster than the old debt.I've seen 20 years to go on a mortgage plus big LC and CC debt all disappear in under 10 years. The only trick is you really don't want to pile up the debt again and you should really want to kill the mortgage.Funny thing, but up here at least, many folks don't seem to mind carrying a mortgage, even into retirement. Beats me but there you go.To All: I am reading your emails and just want to say I do not sell anything, nor do I represent any financial institution of any sort. Getting out of debt is free, ha! So is my contribution to any situation, free from the Internet...remember that, eh?
I don't disagree with you but it's important to know that here in the states..........
anyone seriously considering debt relief of any kind will struggle to find mortgage terms favorable enough to make it worth the effort.
By "terms" do you mean the actual terms and conditions of the mortgage document or the standard interest rate, monthly payment amount, penalty for this or that stuff?Because if you Google up the Australian mortgage strategy or can find a Manulife agent who will explain the nuts and bolts of the method you will see that it works with any amortized mortgage. So that is Can, US, Bermuda, NZ, Australia, etc. Strategy doesn't work in countries where a mortgage isn't a front end loaded til death contract. As I said, interest rate is secondary to defeating the time component.I guess, contrary to what I said up a bit, that there is a trick to it...that would be gaining the knowledge and then having the stones to put that into effect. Trust me, it takes stones for the first bit. You feel quite vulnerable and hung out there but end of year two and for years three and onwards you see the math working and it just gets easier and easier. So that period of vulnerability is short and with today's interest rates as they are its especially attractive IF, IF your situation fits, if the math can be shown to work for you.Any competent accountant can run the math for you, if you are half way decent on Excel, you can do it for yourself. Then its just taking the numbers to a mortgage broker and saying, "Find me this." and getting your new mortgage and then sticking to the plan.That is where most people fail, the sticking to the plan part. If you continue the types of behaviours that got you into the predicament in the first place...well...Thing is this mortgage strategy isn't just for those who are in trouble, it works mathematically for those who fit the requirements regardless of income, colour, weight, religion, orientation. Fun thing about math...it's blind, works or it doesn't.
Metaxa
I'm lazy. Why don't you explain the strategy in a couple paragraphs. I could google it, but I'd like to hear it from you.
Do you sell it? Use it? What's your connection?
TIA
Don't sell anything. Used it, for sure. Friends, relatives and even some enemies have as well. So do the truly wealthy. Its different than selling a mortgage or selling an annuity or insurance. No money to be made..I mean, read on, would you pay someone to tell you this?My connection is I have a hot shot accountant along with a small investment group that has been used by my family for two generations. This is common knowledge in some circles but the lenders spend an awful lot of money telling us how to do it the safe way, their way.
Well...their way stopped working for me, some years ago. I gather their way has stopped working for a lot of you guys as well.
In a paragraph (or three):If your income is the baseball bat and your debts are the baseballs why do we allow the lenders to pitch all those balls in at different rates, times, terms and conditions? All at the same time? What a mess the actual game of baseball would be if a single batter faced multiple pitchers, all flinging in whatever. So that is the argument behind consolidation. Fine as long as you don't immediately begin adding back in more pitchers, right?Now, is your property an asset or a liability? Most would say asset but it doesn't "earn" you money, in fact it sucks up taxes, insurance, repairs...it fits a business model as a liability. But mortgaged property with amortization time left along with durable consumer debt, that if reduced to zero is unlikely to be incurred again can be blended together in a brand new mortgage and you can pay that consolidated debt out faster, using less money and time if you do it according to math and not to how the lenders tell you to do it. Turn your house into an asset that uses its equity to remove or vastly reduce durable consumer debt.Here is how, scoff or blast or flame or whatever you want, I'm certain it works, my accountant is certain, my circle of influence are as well. Its up to you. Remember, this is free Internet advice. Take it or not, I do not care. Use it or not, I do not care.You must have ten or more years left on your mortgage amortization. The more years left the more spectacular this works. You must have equity in your home (an issue for our US friends at this point, I'm aware). You must have durable consumer debt, car loans, college loans, CC or line of credit balances that are up there.You take out a mortgage that enfolds all your debt, only this mortgage must be structured as follows:* 6 month or 12 month closed mortgages only, period. No other terms.
* Amortized out as far as the lender will allow. Even if you were down to ten years left, grab the new one for 20 years, more if you can find a lender. We had a credit union up here offering 40 year amorts for a brief period, my group of investment friends and I were all over that.
* The long amort lowers the must pay to the lender.
* Now you must continue paying as much as you can to the mortgage in this manner: the bank payment and a separate payment (that is lower than the total of your payments previously if you had the consumer debt) that you place into an ING account or something.
* As each 6 or 12 month renewal comes up you pay this accrued amount along with any interest it gathered directly to the mortgage principle, the lender recalculates your new (lower) payment and you simply add that "savings" to the amount you place into that ING account.
* Repeat as needed. Each time you attack the principle outside of the lender's mortgage terms and conditions you increase the amount you place into your ING account, dedrease the amount the lender expects each month and reduce the time that the principle is exposed to interest.You don't make bi-weekly payments, you pay monthly. (The lender must pay amount and your ING amount). The only time you pay extra is at those renewal dates and then you hit the principle directly. Each time one of those renewal dates passes and you haven't broken any of the stipulations the amount the lender expects goes down, the amount you place into the ING account goes up and the amount of your principle drops, all with you not increasing the out of pocket payment amount (unless circumstances allow you to, then you can make that ING account as large as you want.)Do it yourself, not by giving the lender extra money and it is compounding (sort of) working for you, against the lender terms and conditions.Paying a mortgage is the lender's game. It is only at year 17 that your payment will begin to go 50/50 interest to principle. In the first five years of an amortized mortgage you send them 70 cents out of every dollar for interest.So, like a toddler staggering downhill, this process starts out slowly but it is geometric and soon gathers speed. You really begin to see it in year three. In the US your interest saving on the forgone missed payments outweigh your interest deduction if you have the consumer debt. Not so much if you are using the strategy as an investment tool. Plus if you knock the last seven (say) years out of your mortgage, that is seven years of not having to work to earn that money or of keeping that money if you are still working. Now, up here we can port a mortgage from property to property, so that covers moving. I do not know about a US situation in that case. Also, this is only viable if you are not going to replace all that consumer debt and really, really want to pay off your home. As I said earlier some folks seem to not mind having a mortgage. The strategy works well in stable interest times, works spectacularly in dropping interest times and works OK in rising interest times. My best case scenario is a couple I helped set this up with who live in the neighbourhood who heard about it from a friend of a friend kind of thing. They went from paying out $1,200 per month to $875 while at the same time went from 17 years to go on their mortgage to 7. Both mortgage and line of credit (from a major home reno) are done and gone. Because they had extra money to toss into it they in fact were done in 5 years. That and it was during the great drop in interest rates of a few years ago.So they are in the middle of that 12 year period where no one is expecting that $875 from them. 12 years times 12 months times $875 is $126,000.00 In Canada that is after tax money so that is almost a quarter of a million he doesn't have to earn or, if he does, it is his to keep.Run this stuff through Excel or a sophisticated online mortgage calculator or run it past your accountant. An accountant will immediately recognize what it is you are doing, even if they don't already know the strategy. I don't do nothing, BTW, I send folks to a licensed and bonded mortgage broker who places them with a Chartered bank. Up here the consumer doesn't pay a broker and there are no points or escrow or all that debris so there are hurdles a USian would face that would require professional advice but the strategy will still work. No new debt, no fees or whatever unless you have to pay a contractual penalty to replace your present mortgage or whatever. That is where a competent broker or accountant can tell you if it is still feasible.And, as always, remember: on the Internet know one knows you are a dog.
Woof.
By "Terms" I mean anyone currently seeking Debt Consildation in this country right now.......................is probably past the point where.....................except for 25% or more down and a willingness to pay Rates upwards of 10%.................they will even be able to secure ANY kind of mortgage.
If they could do that? They wouldn't be looking at consolidation.
Your payment situation was much like ours. We were behind the 8 Ball, but not too far behind. Every month we fell a little more behind. We signed up before it was a last resort. When we went in, nervous, they laughed. Said we were certainly not the worst case they'd seen. We were in pretty good shape, considering.
Our montly payments were sent to CCCS lump sum. That alone helped. Making one big payment "hurt" more, but was much easier than sitting down and agonizing over all the bills. We spent the same monthly. The lump sum was right around $900. The monthly bills covered under the program averaged around $900.
So we didn't save any money per month. What we did get, was a light at the end of the tunnel. They projected a 5 year term. We were done in a hair less than 4 years. We made the payments, then when a particular account got down to an amount we could cover in full, we'd pay the monthly, then send in that amount as "extra". Vic
I hear a lot of ads on radio for this service
I listen to a radio talk show for consumers and they have cautioned people to stay away from any company who has you send your monthly bills payments to them (the debt consolidation company)
When I enrolled with CCCS,
My statements came to me. Each month I made single payment to CCCS and they distributed the funds electronically to the creditor.
Once very three months they sent me a statement showing what they believed to be the balances so that I could bounce it off the actual statements to ensure all was working as it should.................
The danger with debt consolidation is that many companies negotiate a settlement as opposed to working out a payment plan. That is usually something they try to hide from the customer because it will show as negotiated payoff or Charge off on the credit report....................and that has WORSE long term effects than bankruptcy.
The single most critical issue is that whoever does it.........counselor, consolidation company................................is that all of the debts are paid in full.
In our case, after my daughters issues, we could have easily declared banckruptcy. We decided not to.
I was lucky that I could sell some property and pay it all off in one shot after making 14 months of payments.
WHat CCCS did for me more than anything was negotiate down the interest rates and fees. I did pay them and they distributed the moeny to the creditor.............and that actually worked in my favor as the credtors were more inclined to work with us because they knew there was a program in place that would ensure they got paid on the same day every month.
By the way..................my credit score was 100 points higher the month after I completed the program than it was one I entered it.
wow...sounds like it worked great for you and you really turned the cornerAll I've ever heard is just the bad stories with the bad endingsProblems, get started and then want out and they won't let you cancel, etc etc and on and on It's good to know that some of the things do work and do help people
The real problem is that it's very structured....
In my case we were doing it because of debt that was caused by my daughters health issues and we wanted out of debt........
I don't want to sugar coat it too much.........................I made one lump sum payment of over $1100 per month. Besides the monthly fee...I could see the money paid to my accounts every month. That didn't make the payment any easier to make.
Once they assess the amounts you owe and your income, THEY establish an amount you'll need to pay monthly to eliminate the debts............................dinner out four times a week is NOT part of their budgeting process. SO yes, it can be discouraging.
You can stop payment and disenroll at any time...............but that will also undo the deal that was made with your creditors................ending in interest rates going back up and fees being reenstated.
SO I'm sure that many people enroll and the same urges that got them there...........make staying in the program very difficult.
In my case I wanted it settled.......but for some I'm sure it's a very unwelcomed dose of tough love.
First of, does your wife work for a company that has an employee EAP program??. If so, that would be your best start. They can assist in fiance counselors, legal and finacial advice free of charge.
CCS is another. Speaking with an attorney(not necessarily for BK) and accountant would also be recommended.
"Some"Mortgage companies are helping homeowners, at least in our neighborhood.
Try not to take the unsecured credit and role it into your secured credit on a consolidation loan (vehicle, home). If you fail on that payment., you lose it all.
Look into homesteading your home if there are financial issues. This will protect some of your home(if not all).
I respect Robert's input. Seems right on.
Edited 9/12/2009 6:54 pm by migraine