Debt consolidation

[Hey Bubu]

Do any of you have any experience/Info on this?

I have some debt just like everyone else, but it is all spread across a few credit cards and I'm tired of having to make all the payments and have thought about consolidation, but I know very little about it. is it worth it? does it affect credit history negatively?

I'm now just starting to do some of the research on this, my main goal would be to lower interest rates and make one single payment.

Thanks for any help.

[Adam D]

The best way to do it is through a counciling service that wants you to pay the full amounts you owe. If you only pay parts of the debts in settlements, you have to declare what you didn't pay as income, plus that's most likely to end up on your credit report. As far as the question of how otherwise such a service will affect your credit, that's largely up to your creditors to red flag your payments as having come from a consolidation service.

If you're late or missing payments a lot, then it's absolutely going to help you clean up your credit and your debt. If you're just lazy and don't want to keep up with your payments, then it might be a bad decision. You'll end up paying a lot of money for consolidation. I think on mine I pay 1/3 of my monthly payment to the consolidators. I don't like that, but it was the only pay I could stay on top of my mistakes.

[Sinacle]

do you have a house?

Originally posted by Sinacle
do you have a house?

Taking a loan out of the equity would be the best option. You then have it in one payment and down to 6-7% interest.

As far as debt consolidation, it can be as bad as bankruptcy on your credit. I would avoid it like I would avoid filing bankruptcy.

SFH

[Ash]

I would suggest that if your are going to look into debt consolidation, be selective and do some research on the companies beforehand. You could end up making the situation worse with the wrong company. If you don't have a problem paying your CC bills and pay them on time, I would not go with the consolidation plan, instead, like Stan said, go for an equity loan or other low interest type loan and pay the amounts off in full. What I did was pay the minimum amount on the lower interest cards and pay the max I could afford on the highest one and get it paid off the quickest. Also another thing that has not had a negative effect is getting new cards with lower interest rates that you can transfer your balances to. Most of them will not charge you a fee to transfer the balance, but some will, be watchfull. Another option is to take your lowest interest card, and when I say low, I mean 10 percent or less, have the raise your credit limit to accomodate a balance transfer of your higher interest cards. Good luck.

[Hey Bubu]

Thank you guys.

I do own a place and I have made all payments on time so that's not an issue. Just a matter of consolidating stuff to make one payment and lower interest rates.

[Adam D]

Originally posted by TypeH
Thank you guys.

I do own a place and I have made all payments on time so that's not an issue. Just a matter of consolidating stuff to make one payment and lower interest rates.

I would go with the equity loan then.

Originally posted by Ash
Also another thing that has not had a negative effect is getting new cards with lower interest rates that you can transfer your balances to. Most of them will not charge you a fee to transfer the balance, but some will, be watchfull. Another option is to take your lowest interest card, and when I say low, I mean 10 percent or less, have the raise your credit limit to accomodate a balance transfer of your higher interest cards. Good luck.

Ash brings up a good idea here. A lot of credit cards these days are offering very low interest rates for balance transfers. The rate is going to be high for all new charges you make, but you can get the transferred amount at well under 10%. Just make sure to rip up the card and not use it for anything other than the original transferred amount.

My mother did this and moved her sears balance (which was into the thousands from all new appliances) from 18-19% to a new card that was running 4.9% on all balance transfers.

SFH

[Dionysos]

Originally posted by TypeH
I do own a place and I have made all payments on time so that's not an issue. Just a matter of consolidating stuff to make one payment and lower interest rates.

If you make your payments on time, then you likely don't qualify for most debt consolidation companies. You will notice many of them say in their commercials you have to be at least 30 days late on your payments AND $4k in debt.

Go with Ash's plan. Pay off the highest APR first, then use the money you used towards that card on the next highest APR. It's the most effective debt reduction method. Doing that along with balance transfers could save you hundreds in interest.

[Adam D]

Or just quit paying them. Then you'll save lots of cash.

[Hey Bubu]

Originally posted by Adam D
Or just quit paying them. Then you'll save lots of cash.

Now you are talking

Originally posted by Stanfield
Taking a loan out of the equity would be the best option. You then have it in one payment and down to 6-7% interest.

As far as debt consolidation, it can be as bad as bankruptcy on your credit. I would avoid it like I would avoid filing bankruptcy.

SFH

Actually - debt consolidation is quite often a much poorer choice than bankruptcy.

Stringing out late/bad dabt for a long period of time with consolidation can harm your credit longer.

[Adam D]

Originally posted by xiannaix
Actually - debt consolidation is quite often a much poorer choice than bankruptcy.

Stringing out late/bad dabt for a long period of time with consolidation can harm your credit longer.

In my situation is was the best option for me.

Originally posted by Adam D
In my situation is was the best option for me.

which was best?

[Adam D]

Originally posted by xiannaix
which was best?

Consolidation. I pay 1 payment a month that's being applied to all of my credit card debts. It's paying the entire amount off on time, plus it's rebuilding my credit.