Debt Consolidators?

[KiloWatts]

Does anyone have any information on any Debt Consolidators? I know there are tons out there - many who are nothing short of scam artists.

It's time to get my credit back in order, but I'm in debt up to my ears, and I was wondering if going with a consolidator would help make the process easier.

Originally posted by KiloWatts
Does anyone have any information on any Debt Consolidators? I know there are tons out there - many who are nothing short of scam artists.

It's time to get my credit back in order, but I'm in debt up to my ears, and I was wondering if going with a consolidator would help make the process easier.

As a generel rule this is a bad idea. The consolidation will put all the bills into one payment and extend the term of the debt - usually this will have a negative impact on your credit longer than filing a bankruptcy would....because you'll be carrying bad debt on the books until they are paid off.

Certainly the right thing to do is to pay all of your debts but sometimes we make mistakes and need an eraser for the red ink side of the ledger.

A couple things to consider.

First, there is something called an "accord and satisfaction" agreement. Essentially it says I'll pay you X dollars today to make the debt go away. The benefit for you is the debt goes away - the benefit for creditor is that they get something and they get it now - or risk getting nothing later. 20%-33% of the debt is not unreasonable.

Second, when trying to negotiate a deal with a creditor they will invariably treat the debtor like dirt and use your own guilt to bully you into a bad deal. Find some one to work out a deal for you - creditors will talk to them with greater respect. If you can find an attorney willing to do it the creditord often will offer up great deals because they know the lawyer will have counseled you on bankruptcy.....which would mean they'd get nothing most likely.

It is probably easier to save up the dollars and knock the debts out one by one this way and will probably begin to repair your credit sooner....but each persons situation is unique. I'd be very cautious of consolidation.

[question]

Any idea the approximate cost a financial, or bankruptcy attorney to negotiate your settlement with the creditors?

Originally posted by xiannaix
As a generel rule this is a bad idea. The consolidation will put all the bills into one payment and extend the term of the debt - usually this will have a negative impact on your credit longer than filing a bankruptcy would....because you'll be carrying bad debt on the books until they are paid off.

Certainly the right thing to do is to pay all of your debts but sometimes we make mistakes and need an eraser for the red ink side of the ledger.

A couple things to consider.

First, there is something called an "accord and satisfaction" agreement. Essentially it says I'll pay you X dollars today to make the debt go away. The benefit for you is the debt goes away - the benefit for creditor is that they get something and they get it now - or risk getting nothing later. 20%-33% of the debt is not unreasonable.

Second, when trying to negotiate a deal with a creditor they will invariably treat the debtor like dirt and use your own guilt to bully you into a bad deal. Find some one to work out a deal for you - creditors will talk to them with greater respect. If you can find an attorney willing to do it the creditord often will offer up great deals because they know the lawyer will have counseled you on bankruptcy.....which would mean they'd get nothing most likely.

It is probably easier to save up the dollars and knock the debts out one by one this way and will probably begin to repair your credit sooner....but each persons situation is unique. I'd be very cautious of consolidation.

Originally posted by question
Any idea the approximate cost a financial, or bankruptcy attorney to negotiate your settlement with the creditors?

One can probably get one pro bono - and they could advise whether consolidation, bankruptcy or debt negotiation would be the wisest course of action.

if in Dallas County call DVAP - Dallas Volunteer Attorney Program (214) 742 5768

The cost of filing a bankruptcy may be costly though - can't recall the fee off the top of my head but it isn't cheap.

And interestingly enough - because there is no "right" to a bankruptcy the courts will not waive the fee if you cannot afford it. Thus one can be too poor to file for bankruptcy - odd that huh?

[Adam D]

Having been in this situation, I opted for a consolidation service. I owed too much money, and the debt had gone to collections services several times over in some cases, so the only thing worse to do would be to declare bankruptcy.

Even though it's going to be more expensive for me in the long run to use a consolidation service, it's safer because I know the payments are going out on time (part of my problem from the beginning) and it is rebuilding my credit. Only one of the four collections agencies listed that I am receiving assistance paying my debt.

There's a few things you should know before you make a decision:

There are two types of "consolidation" services. One is an actual consolidation, where you take out a loan to pay off your other creditors and then you pay on the loan. The other isn't real consolidation. This is the option I took. The "consolidator" will have you locate all of the info for your debts, then will contact them to arrange for monthly payments to be made for specific amounts for a period of time. Generally they will set up automatic withdrawl from a bank account to ensure timely payment. They will try to suspend penalties and interest, but will ask you to pay the entire amount.

As far as "accord and satisfaction" agreements, those are sticky situations. Some places are worse than others about accepting (or offering) a decent deal. They do try to appeal to your guilt quite a bit to make you accept the deal. Many collections agencies will outright tell you that they won't accept payments, it's one sum or penalties continue to accrue. If you want to make these agreements, and come out on top, you have to be more of a prick than they are. Ignore all of their threats. What they probably won't tell you is that whatever amount they reduce your debt to, you will have to report as income as pay income tax on it. And I might be wrong here, but I think a payoff under "accord and satisfaction" is also listed as a negative mark on your credit.

[Adam D]

P.S. The place I went through is Federated Financial Services.

Originally posted by Adam D

As far as "accord and satisfaction" agreements, those are sticky situations. Some places are worse than others about accepting (or offering) a decent deal. They do try to appeal to your guilt quite a bit to make you accept the deal. Many collections agencies will outright tell you that they won't accept payments, it's one sum or penalties continue to accrue. If you want to make these agreements, and come out on top, you have to be more of a prick than they are. Ignore all of their threats. What they probably won't tell you is that whatever amount they reduce your debt to, you will have to report as income as pay income tax on it. And I might be wrong here, but I think a payoff under "accord and satisfaction" is also listed as a negative mark on your credit.

They are not that sticky - but usually take some bartering. As I said, it'll work better if you can find some one to negotiate for you. They do not need to be a lawyer merely have your permission to act on your behalf.

Whether an accord and satisfaction is recorded on a credit report is up to the creditor reporting. One can negotiate that they will report "paid in full" to credit agencies. Also, Adam is quite right about debt forgiveness being income. You'll receive a 1099 (or whatever form it is) and you'll need to to declare that as income.