FrontLine - Secret History of the Credit Card

[aa06a47]

Thought many of you might be interested in viewing this website.

http://www.pbs.org/wgbh/pages/frontline/shows/credit/

[FoolAndHisMoney]

Thought many of you might be interested in viewing this website.

http://www.pbs.org/wgbh/pages/frontline/shows/credit/

I am attempting to do a debt settlement with my credit cards through a debt counselor with monthly payments I can afford. I kinda like there plan appears to be 36 months maximum.

While it might not work, I figured I would give it a shot before declaring bankruptcy. I doubt when they start figuring, the credit card companies may not want to settle for 30 cents on the dollar. I figure though, that with trustee fees, and a little budgeting, I can actually end up paying more to the cc card companies in this type of plan than bankruptcy.

I am going through

It is not for profit, has anybody had any experience with them. They seem good in the BBB.

I would much rather go this route and use bankruptcy as a last resort, but I'm concerned that the unpaid amount that the creditor will write off will be taxable income for me and I'll get hit hard from the IRS.

Just be careful you don't get caught in this trap. Good luck!

[so-beyond-broke]

Once upon a time I believed in debt settlement too!

Hi AA

I didn't read the pbs website yet because I wanted to comment on the debt settlement process. Lets see back in 2004 at least up to June of this year, I had been paying all my bills to multiple creditors. i was making a decent income and my partner was working, so we were able to take care of the kids and the bills at the same time. Well my partner started to lose a series of jobs and so it was essentially my income which was paying the bills and supporting 3 kids and 2 adults. By summer of this year I realized that I could not keep paying all those credit card bills. One of them wanted a min. of $150 a month. I had lots of plastic, a car, rent, food and etc to pay. I figured something had to give. I started to do searches online and I read the difference between a debt consolidation, debt settlement and Bk. I heard stories about consolidation i.e. money being sent to these companies was not being distributed to the creditors or that this method would wreak havoc on your CR because of all the late payments, etc. I didn't to do BK because its the most damaging to your CR and I was concerned because my credit was ok and I didn't want to jeopardize my ability to get Student loans. I picked debt settlement. I did not put all of my credit cards into the program because I figured that I would still need some credit. Once enrolled in these programs you need permission to use your cards or take $$ out of the bank. I enrolled the cards with the highest balances which came to about 15,000 at the time. They said that they could slash my payments to about 6,000 for this service I would have to pay the company about 2,000 over the course of 36 months in order to be debt free. I was not happy with the payment which is based on how much your debt was. So for the first 3 months they took out $270 a month (this went to their fees). Then for the following 12 months I was suppose to let them debit $116 a month from my checking and I was suppose to start saving $105 a month into my savings for my settlement $$ with the CCC's.After the 12 months at $116, then I would pay a $29 maintenance fee for the duration of the program. I was doing this for awhile. By the end of 2004 I was realizing that I should add my other CC's to the program which I was planning to do, but in 2005 both my partner and I lost 2 jobs each. I went back to work in late 2005, but my partner is still out of work. The settlement co was understanding when I was unemployed and said that they could only suspend my acct for 2 months at a time which they did. I managed to bounce back and find work in time to make the payments to cover their fees. However, I was also suppose to place $$ into my savings which was hard to do and I couldn't. When I was out of work, I took some of that $$ out of my savings to live on. And you know that its hard to put back what you take out - even more so when you are broke. With each of my jobs, I took a pay cut and now I am making about 12,000 less than I did a year ago. It was at Christmas time in 2005, that I decided to file bk (haven't done so yet, I am learning the process first). Debt settlement was no longer an option. I couldn't make the payments to them and all of my cards were not enrolled in the program, so it became a waste of time. A friend told me to stop letting them debit my acct. So I closed my acct and now they don't have $$ to take, although they keep sending a bill. I am avoiding them too. I sunk in all that money for fees and I can't get it back. For the amount of $$ I paid out, I would have had $$ to pay for a BK lawyer and file under the old laws. In the debt settlement program, they give you a phone # and address to give to creditors as your new contact info, but in actuality its their address so they can represent you. It's funny how this company has left courtesy calls on my machine and bills to pay their fees and now that they have not received any $$ from me in now 3 months all the CCC's or CA's are sending me letters demanding payment. When I pulled 2 of my CR's for free all of these companies which the debt settlement people were suppose to handle are all "charged offs" Not once that I was paying my fees and putting $$ into savings did this company inform me of any negotiations for possible settlements for the CCC's. I only wished I filed BK sooner and saved my money. When I started in 2004, I heard that most people drop out of these programs before the 3 years are up and people in consolidation programs end up filing bk because of the adverse affect on their credit. I guess I fit in this population!! I don't want to scare you. I am just offering my experience. I am not sure if I can name the company so I will not to avoid problems. Good luck with what you decide.

so-beyond-broke

Thought many of you might be interested in viewing this website.

http://www.pbs.org/wgbh/pages/frontline/shows/credit/

I am attempting to do a debt settlement with my credit cards through a debt counselor with monthly payments I can afford. I kinda like there plan appears to be 36 months maximum.

While it might not work, I figured I would give it a shot before declaring bankruptcy. I doubt when they start figuring, the credit card companies may not want to settle for 30 cents on the dollar. I figure though, that with trustee fees, and a little budgeting, I can actually end up paying more to the cc card companies in this type of plan than bankruptcy.

I am going through

It is not for profit, has anybody had any experience with them. They seem good in the BBB.

[FilingOnMyOwn]

so-beyond-broke, what company did you use? I have read about the scams on these companies, and have read some are good and some are not. I have read you should always use a non-profit one. The only issue I have with non-profits are that they are paid by the cc companiees and I'm not sure they have our best interest at hand. I just don't want to get into this for 3 years or 5 years and still owe the cc card companies a ton of money and end up filing anyways.

I think bankruptcy is so wrong that it just killed me to do it. After all, if you owe someone money, you still owe it to them no matter what, right? Well, after living in my parents basement for 2 years and riding a bicycle to work 65 hours a week, I was able to pay down over half of my CC debt that I had charged medical bills onto from an accident. Then I missed a payment and they quadrupled my % rate, and within another year I'm back to where I started in the beginning. So now I look at it this way: Screw em. CC companies are predatory lenders, and loan sharks. They are out there just to eat you alive. If you have to file, then you have to file. If you don't, then don't. Just don't feel guilty over it like I did. I filed, not because it was right, but because it was what I had to do. And now that its over, I'm doing everything I can to make sure it never happens again. So what I'm telling you is, if you have even the slightest doubt that you can't fulfill some kind of consolidation or whatever, exactly as planned, then you might want to give bk some serious consideration and not waste years of your life fighting an uphill battle.

[SinkingFast]

Why not go with on that's approved by the DOJ??

http://www.usdoj.gov/ust/eo/bapcpa/ccde/index.htm

I kinda looked around there a bit at several different states and didn't see the one you've chosen listed. Doesn't mean they aren't reputable, just not listed with the DOJ.

We counseled with one of the DOJ approved ones before deciding to learn about BK. They didn't negotiate any of our balances. They just had interest deals with different Creditors. In most cases, the interest the CCCS had was lower than our rate. But on one or 2 cards, we had lower rates than CCCS was offering.

There was no huge up front fee. A nominal amount to set up the account. Less than $100 that had to be paid seperate before starting payments into the program. There was also a monthly maint fee, that would have been included in our payments.

Although we woulda been outa debt in 5 years in their plan, we simply could not do it. The monthly payments would have been $100/mo more than our minimums. And we couldn't afford to pay our minimums.

You are right, tho. The bulk of the support for many of those CCCA's is from the CC industry.

[Minnymouth]

Many people who use debt consolidation and companies designed to help you with debt problems often go thru the process and then still have to file bankruptcy.

Many have discovered that they SHOULD HAVE FILED bankruptcy instead.

Most of the money paid into the plans is used up in startup fees, monthly fees and interest, and very little is actually sent to the creditors. When the account is actually checked, very little has been applied to the principal.

Debt consolidation/cleanup companies are listed on your credit report just the same as a bankruptcy. There is NO DIFFERENCE.............. it creates the same "black mark" that a bankruptcy does... and is treated as such.

So really, your better off filing bankruptcy, wiping the slate clean, or getting into a Chapter 13 that helps solve the problem without all the fees and interest involved.

[so-beyond-broke]

Minny

This is so true. The company which I had used for debt settlement managed to have all the accts that I assigned them to handle listed as "chargeoffs" and they are in collections. So like you said I have those black marks. Who knows how long a chargeoff will last on my CR's? It will probably be almost as long as a BK. I should have filed BK in 2004. The only difference between now and then is I am making less $$ now than before, so maybe the trustee will have pity on me and grant my Bk when I file this spring. I am still a bit embarassed about having to file, but who will really know unless I open my mouth? Besides, I don't seen anyone offering to pay my debts so I have to do what I have to survive. It will be nice to not hear my answering machine full of messages from people who sometimes leave a number with an "important business matter" and not the name of the company they represent.

so-beyond-broke

so-beyond-broke

Many people who use debt consolidation and companies designed to help you with debt problems often go thru the process and then still have to file bankruptcy.

Many have discovered that they SHOULD HAVE FILED bankruptcy instead.

Most of the money paid into the plans is used up in startup fees, monthly fees and interest, and very little is actually sent to the creditors. When the account is actually checked, very little has been applied to the principal.

Debt consolidation/cleanup companies are listed on your credit report just the same as a bankruptcy. There is NO DIFFERENCE.............. it creates the same "black mark" that a bankruptcy does... and is treated as such.

So really, your better off filing bankruptcy, wiping the slate clean, or getting into a Chapter 13 that helps solve the problem without all the fees and interest involved.

[Minnymouth]

So-beyond-broke,

Never be embarrassed about "taking charge of your life" and trying to straighten out a bad situation.....

Few will know about your bankruptcy unless you tell them.... of couse it is public knowledge at the courthouse where the papers are filed.... but most people will never know....

You have made the attempt thru an agency and that hasn't worked SOOOOOO now it's time to file and solve the problem...

None of us WANTED to file bankruptcy, we were mostly forced into it by creditors, medical bills, lost jobs, etc.....

Most people are good honest folks that pay their bills.... and teach their kids the same.

Those who file "trying to beat the system".... it usually comes back to haunt them thru the US Trustee!

You do what you have to do..... file..... Get a new "fresh start" in life...... and be a lots more carefull in the future in how you handle your finances....

Some things just get out of our control...... and a lot of time finances is one of those things....

[jane taylor]

My husband and I went the credit counseling route several years ago. We didn't want to ruin our credit and didn't know the truth. We were one year from having everything paid when I quit my job for health reasons. Then my parents "bailed us out." That was awful. I, too, have always believed in paying what I owe, but after huge medical bills, job losses, and the credit card companies quadrupling my interest rates, I am feeling better about filing. We are also doing everything we can to keep this from ever happening again!

[Minnymouth]

Looks like your "trip" enlightened you to the world of credit card counseling and negotiations....
Many cc companies will not work with these companies and then your really no better off.
Bankruptcy will wipe out the debt with 0% interest.....
Even in a chapter 13 it is designed around your disposable income.

Very few are non-profit (somebody has to get paid, I'm sure) - nothing is free in this world except air, and if you need oxygen - you have to pay for it!! Most companies have a set-up fee, interest, and monthly payment to them for them to handle your accounts.

Credit counseling is required in bankruptcy to help you reorganize your finances and to help you. BUT it will not solve the problem of eliminating the debt that is bogging you down.

If you are not able to do a Chapter 7, a Chapter 13 will take your disposable income and apply it to your debts over a 5 year period....

Those that have gone the bill consolidation route many have ended up having to file bankruptcy anyways so HOW DID IT HELP THEM???

My thoughts,