DebtFilter: Help me get out of credit card debt!!

March 14, 2006 10:57 AM

DebtFilter: Anyone heard of Superior Debt Services, Inc.?? They're a debt settlement company. Website: http://superiordebt.com/

I'm a senior in college about to graduate in May. I have two credit cards totaling my debt to $6500. I want to consolidate my debt to reduce payments until i get a job, but getting a loan without a job right now is really hard and the rates are horrible. I heard about Superior Debt Services which is a settlement company but I'm not sure if this is the way to go. They basically settle with ur creditors, cancel ur cards, and have u pay monthly to completely reduce ur debt. Has anyone heard of them? Are they a good company? Is this the right route I should take to pay off my high interest credit debt?

posted by deeman to work & money (10 comments total)

Have you completely maxed out your student loan borrowing possibilities? If not, get thee to student aid and do so. Take the check that comes in and send it off to the credit card companies. Much better to have debt at student loan rates than credit card rates.

If you've already done that, one possible way would be to accept one of the "0.9% for six months" introductory credit card offers, transfer the balances from the other cards (and cut them up). This would give you a chance to pay down the principle rather than the interest for a while.

I personally feel that Debt Services companies are deeply scammy; paying money to get yourself out of debt smells bad to me. But then, I suppose it's possible their services may be of help to someone.

Also: the words are "you" and "your". This will assist you in getting that job you're looking for.

See also numerous previous AskMeFi student debt threads.
posted by jellicle at 11:10 AM on March 14, 2006

Yes, you can't get a job using words like u, ur, 2, u and b. Just ask Prince. Jobless all his life. Deadbeat.

Anyway, about the credit cards. Do whatever you can to pay them off without fancy tricks like consolidation. This just moves the problem around - and may add to it. Debt is a behavior issue, not a numbers issue.

Cut up the cards. Pay the monthly minimum on the larger one. Attack the smaller one like a crazy person with everything you have. Sell things if you have to. When you are in for $6,500 (not an unheard of amount), it's hard to see the progress, but any amount paid toward the debt is a step toward being free of that burden.

Down to $3,000 in debt here - and I want to kill it fast.
posted by Bud Dickman at 11:20 AM on March 14, 2006

OK, jellicle, if you are going to be linguistically pompous, it's principal and not principle.
posted by TheRaven at 11:37 AM on March 14, 2006

jellicle is right. "Text message speak" is really stupid, and has only one place: on a phone.

I'd advise the original poster to check Suze Orman's website out. Most of the debt management companies are just crap. Find one that is a non-profit instead.

Also, her book has a lot of good pointers in it. Go to Borders and sit there and read a few chapters. I'm serious. Financial stuff in plain English, and good advice on how to get yourself out of credit card debt.
posted by drstein at 11:51 AM on March 14, 2006

deeman, does this company charge you a monthly fee for their services? If so, then I would stay away from them.

You can basically do their job yourself, by asking for lower interest rates, then paying down the debt on the highest card, while making minimum payments on the other cards. Once the first card is paid, add your monthly payment to the minimum payment on the second-highest, until it's paid off, and so on. The only added benefit that this company seems to have is that they will "negotiate" a lower debt for you. However, if they also charge you a monthly fee (which, from their website, it looks like they do charge something), then how is that actually saving you any money? You can take the money that Superior Debt would charge you and pay it towards your debt.

If you are really interested in working with a compnay, check out the National Foundation for Credit Counseling and their guidelines. They are the group of not-for-profit companies that do credit counseling.
posted by sarahnade at 11:57 AM on March 14, 2006

Any debt reduction service will leave a long and permanent smear on your credit record. This is particulary important to a person just starting out -- it will lead to credit problems long after you have left the current crisis behind.

It is definitely a last resort.

I know that $6500 dollars sounds like a lot of debt from your perspective, but it is eminently managable, even on a starter salary. It just takes time and responsible money habits.

Use this an earning experience -- you'll be glad you did when you have a $300,000 mortgage to pay off.
posted by tkolar at 11:59 AM on March 14, 2006

Umm, "learning" experience. I guess "earning" experience works too.
posted by tkolar at 12:01 PM on March 14, 2006

There seems to be a lot of debt consolidation borrowing going on at Prosper, so you might look into that.
posted by scottreynen at 12:38 PM on March 14, 2006

First rule of getting out of holes: stop digging.

You didn't ask but I'm telling anyway - if you are looking into debt restructuring, rate re-negotiation, loans, panhandling, magic, prayer or tarot cards as a method of reducing your credit card debt and you have not STOPPED SPENDING MORE MONEY THAN YOU ARE BRINGING IN then you are doomed to failure. Period.

Second thing you did not ask: the reason the credit card companies do not mind constantly poaching each other's customers with 0% balance transfers is that the majority of people who do debt consolidation/home equity loans end up just charing those paid-off cards back up and holding even MORE debt. Yes, yes - you are not going to be like those people, all of whom did not say the exact same thing. Seriously - be VERY cautious about acquiring new debt to deal with old debt.

So, assuming you are willing to forever stop spending money you don't have (which accomplishes both previously mentioned things) there's a lot of good information over on the Fool, though I am biased since they agree with me.

You may find that you have to pay crap rates for a period of time before they will renegotiate with you. The unfortunate reality is that you're now going to be paying for those things you weren't willing to wait for till you could afford and you're going to pay the approximate 30% surcharge for them that you implicitly agreed to by paying via credit card. Wallow in the pain so it will help you remember this in the future, but also remember what tkolar said - it's painful, but people manage.

You can basically do their job yourself,

Well, sort of. Some companies will not negotiate better rates with you directly and others will give you a runaround as long as possible since if you have defaulted or even just become a higher risk (google 'universal default clause') they're soaking you on interest. Citibank flat-out told me they wouldn't negotiate with me at all but would with a service. I'm not saying all CCCSes are good, but they may be able to accomplish things you can't because of lender policies.

The Fool has some good criteria for evaluating them.

Pay the monthly minimum on the larger one. Attack the smaller one like a crazy person with everything you have.

No, you should be attacking the one with the higher interest rate. There's some sense of achievement in getting rid of of one quicker but your total cost will be greater the way you suggest and therefor will not just be more expensive but, though the magic of compound interest, will take longer.
posted by phearlez at 2:00 PM on March 14, 2006

have you asked your parents if they can pay off your debt? sometimes all it takes is swallowing ur pride and asking 4help, and they might actually feel proud to be able to help out the 1 they luv. :-)
posted by petsounds at 3:27 PM on March 14, 2006