Are they good? I’m looking to get rid of some credit card debt by consolidating and I’m quite skeptical. Who have you had good luck with/Who would you advise to stay away from?
I’m leery of the whole concept. Too many friends have ended up paying out vast sums over their original debts. It’s generally much better to talk to your creditors if you are having difficulties paying - they would far rather you pay over a longer period than to get into a situation where you can pay nothing (i.e. bankruptcy etc).
Check out Dave Ramsey - not debt consolidation, but a method of paying off your bills and keeping your credit report in good standing. www.daveramsey.com
I used to work for the Consumer Credit Counselling Service (CCCS) in Leeds, UK. I would recommend them as being ethical, professional, and as a charity, free to use. At least they were good six years ago.
However, last time I mentioned them here, someone pointed out that the US CCCS (where the charity originated) had been caught out acting fraudulently or something shaming, so I don’t know what the score is ‘stateside’.
I think the principle the charity uses of essentially pleading financial difficulty to the different creditors, looking to reduce/stop interest on the debts and offering much reduced monthly payments on the basis of a financial statement outlining monthly income versus outgoings can be a more sensible option than simply taking out a larger consolidation loan, usually secured on your property.
My husband and I used a service funded by the United Way. It may have been CCCS but I am not sure. The fees they charged were very reasonable and they were a lot of help to us - we are no longer carrying a metric buttload of credit card debt and have learned not to spend beyond our means, which has kept us debt-free for 6 years now.
I can imagine some of this might be due to the fact that many debt-consolidation companies advertise “lower payments”, which pretty much translates to a longer repayment period. The longer you take to repay it, the more interest they’re going to earn, so if you don’t pay significantly over your minimum, you’re going to end up paying almost as much as you borrowed in interest.
I have a good friend who has worked with Genus for several years. It’s not consolidation–it’s consumer credit counseling–but they work with your creditors to get you lower payments and lower interest rates that you wouldn’t be able to get on your own. They charge a certain dollar amount per month for their services based on your balance (i.e., the fee drops as your balance does).
They’re reputable and do what they promise to do, although in his experience you have to be mindful of what’s going on with your money and check up on them periodically. But that seems like good practice anyway.