Debt Consolidation -Debt Consolidation Scams
If It Sounds too Good to Be True . . . IT IS!
Debt Consolidation Scams can take more than they give. If you feel like you've tried everything, and you are getting that desperate feeling, read this first.
Debt-Consolidation Can Screw You(r) (Credit)
Debt Consolidation -Debt Consolidation Scams
Debt Consolidation-Hype: "Pay Off Debt Faster, Low Interest Rates!"
Pay Off Debt Faster, Low Interest Rates is the hype.
The fact is that only the debt consolidation company benefits from this one. They buy - yes buy - a lower interest rate from the company you owe money to by negotiating payment of thousands of dollars of debt. You are charged a fee for this service and a monthly fee thereafter.
The debt consolidation company pays off your loan faster, you don't. You keep paying them instead.
If you thought making regular payments by your due date was expensive, try making ONE LOW Payment monthly.
These companies only buy bad debt to lower the interest. They will buy groups of debt - thousands of dollars of debt from a company to get the lower interest rate - plus they get a percentage kickback from your credit company to reward themselves for payment of that debt.
Debt consolidation fees are built into your monthly payment - So in the real world you pay as much as you would have if you had sent that extra payment to your credit company and paid off your higher interest rate credit card faster by adding that extra fee to your payment monthly. Actually, you pay more.
They don't re-negotiate your payment date. That means that they pay everyone's payment at the same time, once a month.
If they pay on the 15th of the month and your payment was due on the first, then your credit will take a 30-day late payment once a month - every month-on all three of your credit reports. Late payments stay on your credit history for 7 years (or longer). Feeling good now, I'll bet!
That's not all. You could also be one of those people whose payments get missed once in awhile - And you thought a (one) 30-day late payment on your credit history was bad . . . !
Negotiation is something you can do on your own. If you just hate talking to these people you can even authorize someone you know and trust to negotiate a lower interest rate for you on your behalf. Make sure to tell the person on the other end of the phone that you want to authorize a specific person. If you can't get anywhere negotiating with the first person you talk to, ask to talk to a supervisor. If you can't get anywhere by the third supervisor, you're stuck.
- Negotiate lower interest rates on your own
- Stretch out your repayment schedule
- Pay off the highest-interest debts First and add extra money
- - Write 2 checks: One for the minimum payment and One for ANY additional money with a note in the memo that says: "Principal Only Payment." This one simple step can save you tons of money. If you don't do this, your money is automatically applied to the interest and you'll pay more interest for a longer period.
- Figure out - there are free debt calculators all over the internet - what it would take to pay off your highest interest cards first. I plugged in my own and came up with the fact that if I add $60.00 a month to my minimum credit card payment, I can have a $1300 debt paid off in 12 months with $66.23 interest.
- If I continue with the minimum payment, It can take longer than 6 years and cost me over $2,500. Just that one action on my part put over $1133.77 back in my pocket - in one year. And I did it myself. Without debt consolidation fees!
I don't recommend any
debt consolidation company. They prey on your desperation and the doom and
gloom of the length of repaying your credit cards at minimum payments.
Do Friends Cause Debt? Kind of like asking if fleas cause dogs -
Debt Consolidation -Debt Consolidation Scams
Auto Or Mortgage Brokers-Hype: "Lower Monthly Payments!"
What happens when a mortgage or auto broker gets hold of your social security number?
They RUN with it!
Once you sign a document asking them to help you shop around for the best interest rate on your new loan on your home or auto loan they go for the mother-load!
They will find you the best deal they can find for you - with your credit rating. Not the credit rating you walked in with, the credit rating you end up with when they are done 'shopping' for you.
These companies may even promise to only use your credit to inquire "One Time." What they mean is one time - at a time. I knew a guy who bought a car and was buying a house at the same time.
He went to the home lender to sign the documents for the house and was no longer eligible for the original home loan he had agreed to and had negotiated.
He bought a car and the car company hit his credit reports for 57 different lending companies looking for the best deal. They did a mass e-mailing looking for the best deal. Your credit score is reduced - per credit reporting agency by a range of 1-4 points PER INQUIRY - 57 inquiries lowered his credit score 237 points in 48 hours.
As your credit score goes down your interest rates go up. You get low(er) payments for several years longer than anybody should pay for anything - especially a (non asset producing, depreciating) car. See the (irony)(scam) "real deal" yet?
The Besy Way To Cut your Credit Card Interest:
Debt Consolidation -Debt Consolidation Scams
Balance Transfers-Hype: "Save Money On Interest-Zero Interest!"
I walked into a new clients office one day and he handed me a stack of credit card offers at zero interest and he said to me, "Tell me which one of these is the best deal." Out of curiosity I thumbed through the stack and handed him back the stack and said, "None of them. You will get screwed." "Good answer," he said. I worked with him until he retired, five years later.
Experian, Transunion, Equifax all are watching you closely. Transferring balances between credit cards is an enticing offer for 6 months of interest "free" money.
It's that last day of the six month you have to watch out for.
So, you find another zero interest to switch to. Now you are in the cycle and you begin to look like a bad credit risk. You begin to get declines from credit card companies and now all that free interest you thought would be great is your worst nightmare.
Now you have high debt at over 22% interest and you can't get anyone to take you seriously. Not even the original zero interest credit card you originally signed up for.
To the credit reporting agencies, high volumes of credit card applications is bad. But Credit Card rejection is bad. Add to that credit card closed by creditor. All three are ugly demons on your credit history that could take years to recover from.
If you are one lucky person who can use this scheme to your advantage and pay off your debt in six months, with NO balance haunting you then you must protect your credit.
To protect your credit make sure that you contact the credit card agency and each of the credit reporting agencies - Equifax, Experian and Transunion - with a request to close your account.
If you close it yourself it often won't count against you. If you wait until the company does it for you - for whatever reason you get points deducted on your credit scores.
Debt Consolidation -Debt Consolidation Scams
Hard-Money Loans-Hype: "Need Money Fast?!"
Firstly, loans - Being approved for any loan, is not an easy task.
The hype is all about getting money fast, cheap and EASY. The fact remains, that loans are not EASY to get without good credit and chances are, if you are at this point, your credit has taken a nose-dive into a sink hole.
That is why the hype is garbage. You are told that you can get help EASY with a hard money loan, but the bottom line is that your interest rate will be through the roof, there will be double interest rate penalty's for late pays.
And if your payments are actually lower then you will pay them longer - you will sign a contract that guarantees it. The contract from hell.
Interest rates can easily go to over 20%, which could actually double your current interest rate.
And, with loans being even yet more difficult to get these days - the qualification process changed (small business people especially) - you'd be LUCKY to qualify at all without high credit scores and an established income source.
Debt Consolidation -Debt Consolidation Scams
Debt-consolidation That Makes Sense-Smart Moves
Credit Cards:
- Pay as much as you can every month - even a separate $5.00 check adds up!
- Don't spend what you don't have cash for. Charging a gift for a friend is not a gift for anyone. If you can't afford to pay cash for it, you can't afford it.
- Leave your credit cards at home. At least take them out of your easy access and handy purse, wallet, or billfold.
Budgets:
- Make a budget that forces you to look at all expenses - not just one month, but one year so you take seasons into account.
- Determine where you can cut costs - Wash plastic bags out and reuse them.
- Even cutting out $50 a month that you can apply to debt will save you money.
- Make the C H O I C E to be cheap (thrifty) for awhile.
Debt Consolidation -Debt Consolidation Scams
How do I know this works?
I did it for myself and family. We ate macaroni and cheese, went for walks, stayed at home, got rid of cable TV and only watched the free channels, cut down to basic cell phones, used coupons, recycled garbage 100%.
Did you know that you can recycle 100% of your garbage and cut your monthly garbage bill to nothing? I know now!
When I wanted a new toy or dress I got out the free shopping catalogs that we were stuffing our mail box, picked out a few 'new things,' pretended to order them and then consoled myself with the fact that I had 'ordered' new stuff to arrive in only a few short weeks!
In less than two years we were completely debt free with credit scores that were exemplary. 100% out of debt! And we did it ALL BY OURSELVES.
Debt Consolidation -Get Some Honest, Free Advice
- How to Get Out of Debt-Totally Free Information Like I Couldn't Believe!
This site helps people to get out of debt for free with honest and caring debt help. Loads of debt relief industry inside information and scam alerts. - TransUnion For credit and information management
Find out how to dispute an item on your credit report. Watch credit videos to quickly educate yourself on key credit related topics. Learn about the Fair and Accurate Credit Transactions Act (FACT ACT) and other ways to get a free credit report. - Experian - credit report, credit score and credit check
Experian Official Site - Check your credit report and credit score, as well as obtain business credit reports and other marketing solutions. - Equifax: Personal Solutions: Credit Reports, Credit Scores, Protection Against Identity Theft
Equifax compiles credit reporting data from many sources and creates a credit file that reflects your personal credit history including your FICO score. Now you can view your credit report online enabling you to monitor your credit.