Recently Mr. Nightingale and I have experienced some financial difficulties that look like they’re going to get worse before they get better. We owe a substantial amount in student loans and credit cards debt, and while we’ve so far been able to stay (barely) on top of our payments, we are considering debt consolidation in order to lower payments and ensure that we don’t default on any loans. Within the next couple of months we will be getting hit with another large monthly payment that is absolutely unavoidable (long story there!) and we’re trying to get our finances in order before that happens. Do any of my fellow Dopers know anything about debt consolidation, its effects on credit rating, or any reputable agencies that could help us out? This is uncharted territory for us and we don’t want to damage our credit rating, which is okay thus far. I’d appreciate any advice you guys could give on this topic, particularly if anyone here has ever gone the consolidation route themselves.
well one thing is with some places is it cancells your cards and any thing you have so if you want to keep anything id advise not to add it in
another hting to check on is what debt they wil lactually accept some only accept credit cards and some only accept things up to a certain amount and some wont take any debt you owe to the goverment ie irs debts ect
also what your doing with mostplces is taking all your bills adding their totals up and getting a loan to pay them off and just making one payment to the place that did the consolidation
thats why some banks offer the same thing becuase its a ubacked loan and then ormal loan rules dont apply and loans like this is easy to get in a lot of places
note these places do charge interest rates and they arent set by the goverment and can be rather high so shop around and be careful
All the independant experts I have heard on this subject same the same thing :- do not not borrow more money to try and get out of debt. If you are in a hole stop digging. It is better to get some advice from somebody who does not want to loan you money. Try talking to your credit-card company to try and re-negotiate your payments and try the same thing about your other debts.
The good deal about debt consolidation places is that they negotiate with the credit companies for you to lower your interest rates- substantially. Therefore, the (single) payment you make on the debt goes much more towards principal, much less towards interest, allowing you to pay it off much more quickly. You can shorten your payoff time by several years. Shoot, the savings in postage alone are significant if you’ve been making payments to several places.
I don’t know how doing this affects your credit rating, but I’m sure it looks much better than defaulting on a loan. Using debt consolidation at least shows creditors that you’re serious about paying your debts, rather than declaring bankruptcy.
I have known one person who used the non-pofit debt consolodation companies. His response varies depending on when you catch him.
Not all companies will allow you to keep certain cards acive. This friend, for example, had to turn in all his cards. He has been living on cash alone for a loooong time now. Very difficult way to be, IMO.
Debt consolodation does NOT make credit card companies happy. True, it is better to get their money at lower or zero interest than not at all, but using these services is, from what I understand, just a hair better than out and out declaring bankruptcy.
Many of the companies also offer services such as finding apartments and other housing which you may normally get turned down for because of seeing them in the first place.
The important question is: how long can you survive if both of you lost your jobs? You should be able to make it for AT least two months, by most standards. Not being able to do this puts you in a very difficult state of existence.
I, for one, have been contemplating these services for a long time now as my credit gets worse from late payments even though all balances are going down (strange, I know). Because of late payments, all interst rates are the maximum allowable. Ugh.
As far as the student loans go, you are unlikely to get a better rate of interest than you already have on them. Furthermore, if you call up the loan compan you may find htat they will do an “economic hardship” deferment. Ihad a friend who had to take off a year between her BA and vet school, and that is what she did.
Several years ago I had amassed huge credit card balances that were beginning to become difficult to keep up with. (The indiscretions of youth.) So I went to my bank and arranged a debt consolidation loan. The loan wiped out all my credit card balances, in exchange for which I had to cancel them all except the Visa that I had from that bank… and for that card, my limit was slashed down to $500. But instead of paying 16 to 18 per cent interest on the credit cards, I was paying 7.75 per cent on the loan, with monthly payments that I could manage. Three years later, I was debt-free. The key is, what interest rate are you paying now, and how much can the bank improve on it?