Balance Credit Card Debt Consolidation

If a Debt Consolidation Company takes over my credit card debt does that then free up my credit cards? Or do my credit card companies cancel all the cards immediately?

I actually intend to stop using the cards, but just in case I need them, will they be at zero balance once the Debt Consolidation Company comes in?

Thanks

It depends on what you are calling a debt consolitation company.

Normally, debt consolidation is a big loan that pays off all the small debts. You then have a fixed payment amount for a specific number of payments. Problem with debt consolidation is that many people run the credit card debt back up and end up with the big loan payment and the credit cards to pay.

If you are referring to a debt management program where you send money to a credit counseling service who pays the individual debts, you usually have to agree to stop using all credit cards. In some cases the credit card companies will close your account.

The credit counseling service negotiates lower interest and payments so that you can pay off your debts. If you opt for credit counseling, be sure to use a NFCC member (http://www.nfcc.org/). These are legit, non-profit companies.

2009-02-15 15:05:22 by curiouscale

Eliminate credit card debt by accruing more savings than debt. Learn to eliminate credit card debt from a registered financial consultant (RFC) in ...

I own my home, but do not have enough equity built to refinance and get $50K to pay off credit card debt-what are my options? Someone told me a second mortgage may work, but I have only owned my home for 14 months. Balance on my current mortgage is $77K, home value is max $90K.

You can't borrow your way out of debt. Try and locate a lower interest credit card and transfer your balance. Some accounts have 0 transfer fees and maybe 0 interest or low introductory interest for the first few months. If you have that little grace period you need to pay as much as you possibly can right away and lower that principal amount. Scrimp and save, cut coupons, brown bag your lunch, get a roommate, whatever it takes to start paying down that debt. That is a huge amount of money if you are paying 18%--your interest alone is probably a couple of hundred every money and if you are only paying the minimum you aren't making a dent in the actual debt.

You have my sympathies. I was in debt for a long time and it took a long time to get that debt monkey off my back. Now that it is, I drive a 14 year old car and think carefully about anything I will owe on for more than a few months. It is enormously freeing not to be in debt. You have so many options and you sleep better. Good luck!

2007-06-14 10:49:02 by KarenB

especially if you dont' have the money to pay off the monthly balance? i have $8,000 worth of credit card debt and not sure if it was a good idea to get a debt consolidation loan to pay 3 of 'em.

Keep your head up--you can do this yourself! The debt probably wasn't created overnight, and it is going to take some time to work through to pay it off. Here a couple of quick tips for getting out of debt, and staying out:

1. Stop charging
2. Pay debts off smallest to largest, regardless of interest rate
3. Divide credit card minimum payments in half and pay that amount twice a month.
4. Make micro payments (commonly referred to as snowflakes) any time you receive extra money.
5. Don’t waste time with balance transfers, unless you owe more than $10k.
6. Find part-time work.
7. Close out your newest accounts as you pay them off.
8. Get angry! Make debt repayment your top financial priority and focus all your energy on getting out.

2008-07-24 08:32:56 by tinkerbell_730

I owe $11,000 in credit cards. When economic times were better, it wasn't so bad; I could balance transfer to 0% for a fixed 3% one time fee. Now it is much worse, I had to close an account to keep the interest rate from going high, when my debt to credit ratio is already bad now and nobody will give me a balance transfer anymore.

So now I essentially owe $9,000 at 8.5% or so, if you compound the different interest rates and balances. With my current living situation / area I live in my rent is over 30% of my expenses. I can make payments each month, but eliminating the debt will take at least 3 years and most likely longer, as something always comes up. I budget extremely well; but it just comes down essentially eliminating a social life, cooking every meal, and that just sucks!

Should I do Credit Card Debt Consolidation or is that too drastic and I just should move in to a cheaper living situation (which is drastic as well, but oh well).

Hey there - I feel your pain, but my answer is no. They will charge you a percentage of what you owe, and it affects your credit report when they start bargaining with the credit card companies. (I worked for Experian for 7 years.) Plus, there's no guarantee they can do anything to consolidate to something you can afford - trust me on that one. I've seen it a 1,000 times.

What you can do is bargain with them yourself. Call them up and ask to have your rate lowered for a specific amount of time, which will allow you to 'catch up' and save a bit of money. Then, when it goes back to the normal rate, you'll be able to put some extra money toward your monthly payments which will eventually help your credit report and in the long run save you money.

Basically, and I hate to say it, you're in the same boat as the rest of America. Be glad you don't have my $50K in student loans on top of $9K in credit card debt. Good luck, and really, please don't be fooled by those companies... You'll regret it.

2009-09-11 12:12:23 by Nathan B

what's better to pay off credit balances: loan, credit consolidation, or credit settlement?

Neither is better. Keep making minimum payments. When you get your tax return back next year, take a decent amount of $ and make a payment onto your credit cards. Then, continue to make miminum payments.

Also, DO NOT use the card anymore. Cut it up and throw it away. I know its tempting when it starts to get paid off to just get some gas or pay for some food. You will end up using all the $ you just paid on it.

Just don't use it.

2008-11-09 19:19:44 by roadrnrvike99