Any insight on dealing with consolidated credit or no more debt?

January 16, 2013 9:16 AM

Has anyone had any experience in dealing with organizations like nomoredebts.org or consolidatedcredit.ca?

I was unemployed for two years, and in that time incurred debt of roughly 20K. I am now employed and wanting to pay off what I owe, however the two creditors that I owe the largest amounts to have collection agencies aggressively calling and threatening to garnish my wages etc. I don't have the money to pay a lump sum, which is what they want. I also do not have anyone that will co-sign a bank loan. I thought using one of the organizations that I mentioned would show my intent on paying them what I owe.

I would appreciate any positive and negative experiences.

posted by cleo to work & money (7 answers total)

I used Consumer Credit Counseling for this back in about '04 for the same reasons, and it worked out okay, though I eventually declared bankruptcy due to circumstances that took place after I signed up with them.

Basically, you give them authority to negotiate a better interest rate on your behalf, then they collect a lump payment from you each month, then disburse the money to the various debtors. The debtors have to get on board with the plan, but it's definitely in their interest to do so most of the time. Some of the interest rate reductions I got were disappointing, like going from 15% to 12%, but a couple of cards were reduced to about 7%. It cost about $300.00 to set up initially, but once it was done after a month or so, the phone calls stopped & my debt level was going down every month. I think I had a 5-year plan to pay off 23k.

Of course, it ruined my credit instantly, but the last thing I needed at that point was credit.

Research these debt counseling companies carefully, though -- there's a lot of them out there and I have heard some shady tales, though CCC was on the up-and-up. Many of them are very similarly named for the sake of creating brand confusion. Do your research.
posted by Devils Rancher at 9:28 AM on January 16

I used Greenpath. I don't remember the details other than it worked! I paid off all credit card debt in five years. When I started, five years sounded like an eternity. Ignore those thoughts.

You could try calling the credit card company yourself and seeing if they'll settle with a lump sum of a smaller amount, or if they'll agree to a payment plan. Because you'll have to pay a small fee to the consolidated credit place, at least I did.

Once you get the account set up, I strongly advise you to set up an automated payment plan with your bank so that you take all action out of your hands. I mean look, obviously you have some issues with debt so make it as easier & hands-off as possible to pay back.
posted by lyssabee at 9:33 AM on January 16

You probably want to go with a non-profit for this. Some of the fee-based credit counseling services can do more damage.

Consumer Credit Counseling, as Devils Rancher suggested, is good.

I called them to assist with some budget help, and they had some great ideas. We also might qualify for their debt program, but I haven't looked much further into that.

The person I spoke to was really pleasant and had professional training in personal financial issues. I would go back to them in a heartbeat if I need more budgetary or debt assistance in the future.
posted by zizzle at 10:12 AM on January 16 [1 favorite]

I used Money Management International and in fact just finished paying off my debt (~$14k over 4.5 years) They negotiated lowered interest rates I never could have gotten on my own and my monthly payment sum was reasonable. They do charge a monthly processing fee but it's factored into your monthly payment. I found them easy to work with.
posted by noxetlux at 10:32 AM on January 16

From a MeFite who would prefer to remain anon:

You need to find out whether these creditors that are threatening wage garnishment have actually began the process of suing you yet. I got a letter from a law firm informing me I was being sued (by someone else) and they were offering to represent me, for a much much much smaller debt than what you're describing. Some bill collectors won't actually go that far but you might be surprised by how many do, since most people just keep ignoring the letters and summons, and then the creditor can easily win a judgement.

What I was told by both Consumer Credit Counseling and Money Management International is that their services are generally unable to assist with debt that has proceeded to the "courts and lawyers" phase of collection; the best they could offer was to furnish paperwork (that I could sent to the attorney/take to court) saying that I was enrolled in a debt management program and request that this debt be included, but the creditor wasn't interested in this. Some just won't go along with these plans, but many will as it represents their best chance of repayment.

If you reach out to them, both CCC and MMI will tell you which creditors they have relationships with and what your potential rates/duration might be, so it's worth looking into if it hasn't progressed that far. I personally chose a different route.

Best of luck to you.

posted by jessamyn at 5:23 PM on January 16

I, too, went through Consumer Credit Counseling, about 15 years ago, for some $25-30k debt on several credit cards (with my then-partner, now-husband).

The only thing I should have done differently was to make sure as much of our balance as possible was shifted over onto the lowest-rate cards before we initiated the process. The process was somewhat of a pain, since they didn't take checks, so I would have to go get a money order and drop it off at their offices by a certain time on a certain date.

But it's one of the best things we ever did. Since then, we've stuck with debit cards for those things we can't actually pay cash for (online purchases, travel). We've had a couple of car loans (and paid both off early) and signed up for a "no interest if paid off within certain amount of time" furniture store card, which we used for specific stuff when we moved (bedroom and couch). It hasn't ruined our lives, and I no longer spend the first few minutes of each day clutching my head in despair.
posted by Occula at 8:48 AM on January 17

Thanks everyone for your input. It's been quite helpful.
posted by cleo at 2:42 PM on January 17