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Is this credit counseling scam worth it?

Anonymous — Tue, 19 May 2009 15:45:18 -0800

DebtFilter: I've been paying a credit counseling company (law firm, actually) $60 a month for the past three years to make my minimum payments to the credit card companies I owe. They lowered my annual interest rate to an average of 10% and threaten that if I cancel their service, my interest rates will reset. Is that true? I owe about $16,000 (as of today) on four different credit cards and my monthly payments are ~$700. I signed up for the credit counseling company because I had panicked about making my payments and needed to take action. It appeared legitimate at the time, but I didn't really do any research before I solicited their services. They have since been charging me, in addition to the initial $600 fee, monthly fees of $60 to transfer money from my account to my credit card companies (I can still make my payments to the banks directly; I've regained all online access to my accounts, etc.). They provide no other service.

If I took out a personal line of credit to consolidate my debts, I'd still pay more than the current 10% APR, so I think I'm getting a decent deal: but I could make the payments myself, on time, and I'd save a good amount of money.

I called a couple of my creditors to ask them if I would get to keep my current low interest rate, but got very evasive answers (one bank couldn't answer, another told me they'd only talk to the lawyer who currently handles my account).

When I called the credit counseling company to ask what would happen if I canceled their services, they became outright threatening, told me that I'd be a pretty difficult process to cancel their service (signing up took a day and an electronic signature!), and told me the interest rates would reset to the credit card defaults (upward of 25% APR, I think).

Do you have any experience with this situation? I finally have enough time to deal with this: what would you advise me to do?

The credit card counseling agency is called Coastal Credit Solutions; the law firm they signed me up for is Laura Hess Kennedy, currently disbarred: they recently lost a class action suit due to debt settlement fraud (I received a whole lot of mail regarding that, but I'm not a client of "debt settlement" services; they just lowered my interest rate but not my debt amounts or minimum payments).

Is my debt going to ruin my parents' credit?

Anonymous — Mon, 20 Oct 2008 07:09:14 -0800

How will a line of credit that my parents cosigned affect my ability to enter into a debt repayment plan through credit counseling? I've reached a breaking point and I need some help figuring out how I'm going to deal with my debt. I already plan to speak to a credit counseling service and possibly a trustee in bankruptcy next week, but your advice is greatly appreciated. In general, I understand what's going to happen in terms of setting up a repayment plan or a consumer proposal. I'm concerned because part of my debt is an $8000 line of credit that my parents cosigned for me when I was a student.

Is there a way for me to address my debt woes without screwing up my parents' credit? Secondary question: how do you talk to your parents about stuff like this? They're going to be horrified and disappointed in me and it's making me sick thinking about it.

Supporting details: I'm in Canada, I'm 35 and I owe about $45K total ($36K credit cards, 8K line of credit and 3K overdraft). I have no assets and I'm just getting back to work after losing my job a couple of months ago. My parents could almost certainly pay off the line of credit easily... they're pretty well-off, but a little sensitive about money right now because my dad is retiring next year. Our relationship is OK but not fantastic.

Throwaway gmail account is canadiandebtor@gmail.com.

Credit Counseling Before or After Marriage

Anonymous — Mon, 20 Aug 2007 13:03:31 -0800

I am looking to work with a credit counselor to manage our debt. Should I get this done before or after I am married next month? Most of the debt is mine, but there's a good bit that's his too and some that is shared. The debt includes a few credit cards, student loans, and a couple car loans. We are located in South Carolina. We are looking to get our debt to a manageable level (any one day wipe it out, but that's a looooong way off). Our finances are completely intermingled at this point as well, since we have been living together for about 5 years now. We do not own a home.

Pros & cons to before and after marriage?

Any recommendations for non-profit credit counseling groups to work with would be welcome as well.