does the debt consultant program affects my credit in a long run?
i contacted a debt consultant and was told that i can decrease more than half of what i currently owed the credit card. but the program required me to stop making paying and wait for their negotiation. i know that’s going to affect my credit really bad, but how about after i settled all the debt, would my credit comes back up? i am planning to buy a house in the near future, would the lender see this as a negative? or should i not use to program if i am planning to buy a house?
What keeps most people in debt is the fact that they keep spending more money than they make. They look at the "monthly payments" instead of the total debt loan that they are carrying. People need to stop spending now and concentrate on becoming debt free. Please do not consolidate or use a debt reduction company . It is not free, they will lower your payments by increasing the length of time until you are debt free, and you will take a hit on your credit score. Or they negotiate your debt down after telling you not to pay for awhile adding another hit to your credit score. If you do this, it will seriously impact your ability to buy a house for the next several years. Student loans are the only debt that can garnish your wages for non payment without taking you to court first. Just list them out on a piece of paper or a spreadsheet and follow the plan. If you work the plan, the plan will work for you.
A. Have a garage sale and sell anything that you no longer need or want.
B.Get a temporary part time job, if you have one, get another.
Here is a plan that can help you. If you work the plan, the plan will work for you:
1. Make a budget. Make the budget a week before you get paid. A budget is not a punishment! It is a tool which will free you from ever having to worry about money again. Put everything in your budget. Especially those annual, biannual, or quarterly bills like car registration, insurance, etc. Give every dollar you are going to bring home the name of where it is going. Add an "emergency fund" category to your budget for 25 dollars and save up until you have 1000-1250 dollars. Your emergency fund will help keep you from getting into new debt because of an emergency. If you can, set up a direct transfer to a savings account for your emergency fund. That way it moves automatically and you don’t even have to worry about it. You must cut your spending and live on less than you make.
2.First get current on all of you debts and make no more late payments. Stop using your credit cards immediately. Do not take on any more debt. Credit cards are like quicksand only the death is much slower. Make a list of all of your debts in order of highest interest rate to lowest interest. Use cash only for your spending from now on.
3.Pay the minimum due on all of your debts and then put your extra money towards paying off the highest interest one first. After you get that one paid off, you put the money you were paying on debt #1 (the minimum payment and the extra payment) towards debt #2. That will pay debt #2 off faster. When that is paid off, you put all three payments towards card #3 and that one will be paid off pretty quickly. As an example:
To start :
Debt #1 (highest interest): minimum payment+ extra payment
Debt #2 (middle interest): minimum payment
Debt #3(lowest interest): minimum payment
Debt #1: paid off
Debt #2: minimum payment from Debt #1+ Minimum payment from Debt #2 +extra payment
Debt #3: minimum payment
Debt #1: paid off
Debt #2: paid off
Debt #3:Minimum payment from card #1+ minimum payment from Debt #2+ minimum payment from Debt #3+ extra payment.
That way, you will get them all paid off, on time, and pay the least interest. It will also help towards rebuilding your credit since you will no longer have any late payments. This works no matter how many different debts you may have.
4. After you get all of your debts paid off, add to your emergency fund until you have 6-12 months of income saved up. Put that emergency fund money into a liquid money market fund or into a Bank of America no-risk CD so that if you need the money you can take it out without penalty.
5a. When you have your emergency fund in place, add a category for "fun" to your budget. Save for a holiday, a vacation, a big screen, or dinners out, whatever goal you want. Remember to enjoy your life.
5b. When you have your emergency fund in place, start saving for your retirement. Join the 401(k) plan at work and contribute the maximum. Your employer probably matches at least part of your contribution so why give up free money? Open a Roth IRA and contribute the maximum on a monthly basis. If you start saving for your retirement now, you will probably retire a millionaire.
5c. When you have your emergency fund in place, start saving for your next car. Only buy cars, or other things that depreciate, with cash. Save up for a nicer car. That way you get the interest instead of paying the interest.
You can do it and it isn’t as hard as you think. Just follow the plan
August 18th, 2010 at 11:50 amNo
August 18th, 2010 at 11:50 amYou can use this credit monitoring service to pre-estimate future scores for different scenarios of such payments – credit-report-free.totalh.com
August 18th, 2010 at 11:50 amYou can ask this question on Filife and probably get more knowledgable answers from financial experts – http://best-offers-online.com/financial-answers
August 18th, 2010 at 11:50 amAs you know, debt settlement is the process in which you stop paying your creditors for some time and save that money so that you can then negotiate with them to settle the debt for a lesser amount.
If you are in serious debt, debt settlement is a much better option than bankruptcy. A bankruptcy will be listed and hold your credit score down for 10 years, while the delinquent payments incurred while enrolled a Debt Settlement program will be there for only 7 years (and in some instance, even less). So at a minimum, your credit report will be cleared at least three years earlier when using Debt Settlement company as opposed to bankruptcy. Another important factor to remember is that a typical debt settlement program ultimately resolves your debts for much less than other debt relief options. And, unlike bankruptcy, you won’t have to sell your house or other assets in order to free yourself of your liabilities.
It may adversely affect your credit rating for a short period. Anyway your score should also go up in the long run because most debt management programs teach you fiscal tips that will help you develop healthy money management habits. You will hopefully learn to consistently make on-time payments as well as keep your credit balances down to a manageable level. All of this will push your credit score upward over time.
August 18th, 2010 at 11:50 amHi,
Hope this info will help you.
I used "Credit Solution" to settle my debt and avoid bankruptcy.They managed to reduce my debt up to 58% and improve my credit score .It’s legitimate . I came across this company on NBC News Special Edition.Check it out here:
August 18th, 2010 at 11:50 amhttp://CreditSolution.ez-mart.biz
That is called debt settlement.
A debt settlement is where you pay less than you owe on the account. Typically those types of companies fail because they have no arrangements with your creditor.
Here’s how this scenario works:
Lets say you owe $30,000. The debt settlement company charges you about 7% of that as their start up fee (about $2100). They tell you to pay them $300 a month until that gets paid and not to contact your creditors. Ignore the calls. Ignore the letters. In the time frame it takes to pay off their start up fee, your accounts may get charged off and go to collections. Debt settlement companies can not stop lawsuits either. While your accounts are in collections they continue to gain interest as well. When you finally hear from a collection agency and tell them to call the settlement company, they negotiate for 20-20%. They don’t let you know that you will get a 1099 from the creditor as unearned income and will have to pay taxes on the money you saved. Plus they usually charge you about 10% of the amount saved.
I never recommend settlement because if it was so easy, why would you have to pay someone to do it. Why would it have to destroy your credit? Why would you have to pay the IRS?
August 18th, 2010 at 11:50 am