Can I use a Credit Counseling Service after debts are charged off?
Posted in Credit on 11/08/2007 03:12 pm by admin
vort3xyz asked:
I havent paid my bills in like a year. My credit report says they’re charged off as a bad debt, and there are 3rd parties trying to collect on the debts. I have come into steady income and I would like to repay the debts. The 3rd party collectors want lump sum settlements and don’t want payments. Can I use a consumer credit counceling service to setup a payment plan to pay these debts off? Or is it too late for that? I was considering a chapter 13 to get everything straightened up and on plan, but my coworkers think that’s a bad idea since I will not be saving any money from the chapter 13 as far as my financial numbers work out. (disposable income vs total debt after 5 years of payments).
I havent paid my bills in like a year. My credit report says they’re charged off as a bad debt, and there are 3rd parties trying to collect on the debts. I have come into steady income and I would like to repay the debts. The 3rd party collectors want lump sum settlements and don’t want payments. Can I use a consumer credit counceling service to setup a payment plan to pay these debts off? Or is it too late for that? I was considering a chapter 13 to get everything straightened up and on plan, but my coworkers think that’s a bad idea since I will not be saving any money from the chapter 13 as far as my financial numbers work out. (disposable income vs total debt after 5 years of payments).
I think one of my creditors (discover) may be preparing to sue me. They issued a complaint to a local courthouse, but the sherrif hasn’t been able to track me down to serve the papers yet.
SON
11/12/2007 at 12:18 am
It’s best *not* to use a debt reduction or credit counseling service. Most are out-and-out frauds and the ones that aren’t frauds can’t do much, as most credit card companies will not negotiate with such companies – they will only negotiate with attorneys.
It would be best to hire an attorney who handles consumer litigation work and has experience handling consumer debt matters. You can usually get a attorney referral from your local county bar association.
11/12/2007 at 7:27 pm
Try Consumer Credit Counseling Services at 1-800-388-2227, they are the oldest and largest non profit credit counseling service in the Country.
They have offices in every State and are the only company recommended by the Consumer Action Handbook.
11/13/2007 at 8:22 pm
Spiffman and Bill C are both incorrect. Credit card counseling programs are for indebted consumers that need a lower interest rate on said accounts. These programs are designed to reduce the interest rates and have you out of debt in 4-5 years or longer. CCCS programs are also paid for and sponsored by the creditors themselves with a process know as “Fair Share”. You will be paying a fee for CCCS programs through a”voluntary contribution” for service that is mandatory otherwise they will cancel your account. Credit card counseling will also show up on your credit report for years to come and can be viewed the same as a bankruptcy by most mortgage companies because you still have your outstanding debts and you are using a third party to pay your debts.
Credit card counseling is for consumers that are current on their payments. Collection agencies do not charge interest but rather a fee so enrolling in a credit counseling program would not fit your needs seeing how you would not receive and benefits of lower interest.
If your being sued then you should retain a lawyer to defend you on that account. Being a debt negotiator I can tell you that Discover will settle with you but you will need to setup a plan and it may be too late. Debt settlement programs reduce your debt by having you save money monthly in a special purpose account in order to accumulate enough money to offer a settlement. You could be to far past due at this point for debt settlement services but you could apply the process on your own.
You wanted to make monthly payments on the accounts so what you should do is save that money over the next few months until you have 5-600 saved. Then approach Discover and tell them that you can pay whatever you have today plus two more payments of 150 and then we will call it even. They will accept but they are going to want payment immediately. Don’t do that. Tell them that you can wire the money upon receipt of a settlement letter that is signed by the bank. That way your negotiations are now on paper and no one can the collector in this case can go back on their word.
Sample Settlement Letters
11/16/2007 at 3:20 pm
I do this for a living, let me try to help. First, let’s take a look at your overall goal, then I will attempt to get you there. 1. you want to avoid a suit. 2. you want to pay your bills 3. you want to repair your credit. Is that the correct order? This is a business, you need to approach the situation with the mind set of ‘what makes a good business decision for everyone’. 1. Contact discover. Start with that bill since it is escalating. Offer them a monthly payment AND STICK TO IT ! Make it low enough to be affordable yet high enough to make it worth while. In other words, why would they involve the cost of suit if you are willingly sending them money? Another approach, arranged with them in advance, is to pay them a large upfront payment, to get their attention and show your sincerity, then small monthly payments. Again, it must be high enough to be cost effective not to sue and garnish. 2. Paying your bills can be done easily BUT since you are making efforts to improve your credit, get the most out of it. Consumer Credit is a great organization to assist you with budgeting, getting the bills paid and overall, improving your credit. In addition, as long as you are enrolled and following the program, the suits and garnishments will stop. So, this may be an option for you. However, if you can work it out with Discover, and you can create and follow your own budget, you won’t need Consumer Credit. About what the bill collectors want: I want a BMW sport convertible, but lets be reasonable. Send the payment arrangement that works for you. Something is better than nothing. 3. If you are able to pay your bills, avoid bankruptcy. It will haunt your credit for a long time. You can pay your bills and repair your credit at the same time. Even on a budget, DO NOT settle for less on accounts if you don’t have to. This eliminates advantages for you down the road in repairing your credit. You can approach it from paying one bill at a time or small payments to everyone. However, in advance, you should work out an arrangement with each so as to achieve the goal of deletion from your credit report, once paid in full. This is done with a lot of work on your part. I hope I have helped. The fact you are now in a financial situation to correct the past year’s downfall is great. My hope for you is that you get the best credit available under the circumstances. Please feel free to email me with any additional questions. I am happy to assist you.