Debt consolidation? Is it even worth it?

[Hawkeye-X]

My wife and I are thinking about debt consolidation - is it even worth it? We are carrying about 20-25K worth of debt, and we are having trouble paying it down, my wife wants to consolidate all the debt into one big monthly payment. Is it even worth it?

And if so, what company/organization would you recommend?

Hawkeye-X

[Cronus Protagonist]

1. Default on it all

Your credit will not be damaged any worse, and you won't have to pay a dime.

[Warren Stupidity]

2. I'd recommend a good personal bankruptcy lawyer.

And no, debt consolidation is hardly ever 'worth it'.

[yodoobo]

3. usually not.

I've been there.

After consolidation you'll simply owe more after fees and likely a higher interest rate.

[walldude]

4. I checked out a few places once awhile back

probably close to 10 years now so this may not apply anymore. The places I checked out wanted to totally take over my finances. In other words my paychecks went to them, they paid the bills and gave me an "allowance". Sounded fishy to me so I bailed.

[DesertFlower]

5. my granddaughter had over $20,000 in credit

card debt. she was making the minimum monthly payments, but they still raised her interest rate. she stopped paying and it grew to $32,000 with interest and penalties. she checked out some of the agencies and she wouldn't have been able to make the payments with the deals they were offering her. of course, they get a cut.

after a few months they started contacting her with deals -- for instance she owed $8,000. they settled for $5,000 but it had to be paid within 30 days. one settled for $2200. she had the money because she hadn't been paying them for months. hubby and i gave her $7,000 and now i think she only has one where she makes monthly payments.

she recently checked her credit score and it was around 650. she was surprised.

[Texasgal]

6. I'd shop around

dept consolidation IS a good idea. Many times you can cut your intrest or cut what you owe and save THOUSANDS of dollars.

I did it about five years ago, 25,000 in dept. Paid it off, cut up my credit cards and never looked back. I saved literally 10 grand with dept consolidation. To me, it is so worth it.

My credit score is now 720... if I ever NEED credit I have it without any issues.

My advice is to do it. Get the monkey off your back.

[KittyWampus]

10. I did same. First outfit I signed up with was shady. I called my bank & they referred me to

a reputable service.

I got out of the agreement with the first group by being extremely aggressive. Got my money back.

[jwirr]

7. Okay, then debt consolidation is not for me. What can be done when

you owe the money mainly to one bank? about $10,000. I am on a fixed income and what I really need is to get them to agree to a lower interest rate and a basic payment each month. At the moment I just figure I will die in debt and live in poverty because of it.

[KittyWampus]

9. Do not pay attention to the posters who've responded. They are incorrect.

Contact the Credit Counseling Service of Delaware and Maryland. They do not take any money out except for a vanishingly small fee each month. IIRC, they took maybe $10 but I saved thousands on interest payments.

What you do have to do is pay X amount they determine each month for no more than 3 years.

http://www.cccs-inc.org/

That said, there are legions of "services" that will fleece you.

[Fresh_Start]

17. if you owe it all to one bank

call them and ask what type of help they can provide you.
I'm assuming that you are having difficulty making the payments and paying for housing, food, medicine etc.
Many banks have programs where they reduce interest rates for those in need (Hardship).

[jwirr]

18. Thank you.

[KittyWampus]

8. Use the right service it is absolutely worth it. Some are reputable. Interest is reduced

a great extent. The service I used took out maybe a small amount each month but there was no huge fee to begin with.

Credit Card Counseling Service of Maryland and Delaware.

http://www.cccs-inc.org/

The people who've responded so far are incorrect.

Also, contact National Foundation for Credit Counseling

http://www.nfcc.org/

[spotbird]

11. Consumer credit counseling

http://www.cccsstl.org/

But asking them for help will lower your credit score. They can negotiate a payment plan that works.

[dana_b]

12. another good service

(besides whay Kitty said) is Take Charge America. www.takechargeamerica.org

Instead of paying minimum payments over 20+ years (to get it all paid off), I'm paying the same amount each month and it will be done in four years. It is saving me thousands and thousands in interest.

They consolidate the debt after negotiating with the cc companies and then you make a monthly payment. The only charge was the initial $80-$100 to get going. The accounts will be closed and you can't open any other accounts while paying the debt off.

Oh, and I found this place from another DUer. I don't remember his name! damnit.

BBB rating = A+
http://www.bbb.org/central-northern-western-arizona/business-reviews/credit-and-debt-counseling/take-charge-america-inc-in-phoenix-az-27381/

[Warpy]

13. It depends on what you're doing

If you're taking the equity in your house and using that to pay it off, taking on a second mortgage, that's dangerous since we're nowhere near the bottom of the real estate market and the last thing you want to gamble with is your home.

If you have ultra high rate credit cards (25% interest and higher), it makes sense to get that rate reduced. Often, the credit card company itself will do that if you cancel that card and simply pay it off.

If you've got a bunch of little debts on credit cards with various but low rates, pay the cards with the smallest amounts off first and cancel them. Concentrate on the big debt cards last, but do pay those off completely down the line. There are several reasons for paying off the little stuff first: sense of accomplishment, good number on your credit report, one less piece of plastic to tempt you into taking on more debt, and one less check a month to write every time you do it.

Most debt consolidation services that I've heard about are a ripoff. While it might seem easier to write one check a month instead of ten, the service usually puts you into a riskier situation, overall.

Your best bet is to find a company that will help you to figure out a budget so that you can get that debt paid off.

Good luck.

[sylvi]

14. My wife and I

My wife and I used Consolidated Credit Counseling Services. They got the interest rate reduced to zero and stopped the over-the-limit fees on all our accounts except Sears (bastards wouldn't budge). Actual "counseling" was optional. We never used it. Just sent them a monthly check and they disbursed it. I think the monthly fee was $25.00 but that was way, way below what we would have been paying in interest and fees otherwise. Plus, our credit was better afterward. That's just my experience but it may be worth checking out.

http://www.consolidatedcredit.org/

[madinmaryland]

15. Talk to an Attorney before doing anything.

Even for those saying credit counselors are ok, you MUST be careful with them.

See an attorney, please.

[JCMach1]

16. Only if you actually can pay it off... Otherwise, bankruptcy can be the better option