Debt Settlement/Debt Management

[chimaera15]

Does anyone have any experience with debt settlement/debt management companies? Are they reliable and trustworthy?

Over the years I've accumulated a large sum of debt, and I've slowly been paying it off. My debt is spread out over 7 different cards and managing it has become quite difficult. My credit rating has suffered quite a bit and a consolidation loan is not an option for me. My gross salary is $60k/year and I can comfortably put $1,000+ towards my debt but I'm looking to make just 1 payment instead of 7 and maybe lower the interest on these cards because now i feel like I'm stuck in a neverending cycle whereby my payments just cover the interest fees.

Has anyone heard anything about DebtManagers.ca or TotalDebtFreedom.ca?

Thanks...

[i6s1]

Does anyone have any experience with debt settlement/debt management companies? Are they reliable and trustworthy?

Over the years I've accumulated a large sum of debt, and I've slowly been paying it off. My debt is spread out over 7 different cards and managing it has become quite difficult. My credit rating has suffered quite a bit and a consolidation loan is not an option for me. My gross salary is $60k/year and I can comfortably put $1,000+ towards my debt but I'm looking to make just 1 payment instead of 7 and maybe lower the interest on these cards because now i feel like I'm stuck in a neverending cycle whereby my payments just cover the interest fees.

Has anyone heard anything about DebtManagers.ca or TotalDebtFreedom.ca?

Thanks...

They do charge a fee, and it will hurt your credit rating.

1. To avoid the hassle of 7 payments, just set up your online banking to make automatic minimum payments to each card on your payday. As long as you're not putting new purchases on your cards, minimum payments will stay the same or drop slightly each month.
2. Target the rest of your money at your highest interest card.
3. Transfer balances from high interest cards to lower interest cards. It might be worthwhile to pay a yearly fee to get a lower interest rate one one or two high-limit cards.
4. After 6 months of making payments on time, the banks might start sending you low interest cheques.

You can do all the same things as them for about the same amount of time, so really there's not much incentive to pay them to help you.

[Thalo]

The way I understand debt settlement companies is that they basically get you to default on your loans then work out a deal with the lenders so that you end up paying a lesser amount to settle your debts and then charge you a fee for it. Meanwhile you pay your regular payments into a holding account and that money is eventually used to pay the settlement amount. End result is you're free of debts but your credit rating is massacred.

[srg83]

A friend of mine was in really bad debt and was advised by another friend (and his dad) to use one of these companies. In her situation, it was really out of control and it was in her best interest to call one of these companies. She was getting harassed by collection agencies because of her debts and going to a consolidator will get them off your back. However I think the one she went with was non-profit - if you absolutely need to use a debt consolidation/management company, I would go with non-profit.

As for the OP, it sounds like (as others have said) you still have a bit of a handle and control of your situation, but you feel it is slipping slightly. I'm in a bit of a similar situation; not as many cards as you, but same deal - owe many places a fair bit of money. I would much rather pay one loan than what I am.

I think one way of getting a better handle on the 7 cards is to make a plan. i6s1's suggestion is sound - start with that, and write out your plan - either on paper, in Word, or a spreadsheet - and figure out where you want your money to go and when you'll be done with the credit cards for good.

[mrtoronto]

I believe one way is to pay all balances with LOC if you have one. The other way might be to transfer balances from all cards into single card and pay only one card. You might be able to get lower rate on balance transfers.

[AllWheelDrift]

I believe one way is to pay all balances with LOC if you have one. The other way might be to transfer balances from all cards into single card and pay only one card. You might be able to get lower rate on balance transfers.
The problem is the OP probably won't be approved for a LOC at this point, and probably doesn't have enough room on his cards to transfer the balances to a single one.

i6s1's plan sounds like a good one. After a while of following his plan it may also be possible to get a LOC or consolidation loan. The important part is to always make your minimum payments. Also as he mentioned, some cards may have a "low rate" option with an anual fee, or you may be able to switch to another card with a lower rate from the same issuer.

[TFCREDNWHITE]

The way I understand debt settlement companies is that they basically get you to default on your loans then work out a deal with the lenders so that you end up paying a lesser amount to settle your debts and then charge you a fee for it. Meanwhile you pay your regular payments into a holding account and that money is eventually used to pay the settlement amount. End result is you're free of debts but your credit rating is massacred.

Well, Debt Settlement companies are a great way to get a hold of your financial life by horns. You see herein lies the problem...You have already posted that you are having a difficult time for whatever reason...

It seems like your debt is controling you instead of the other way around!

I would go with a debt management company or service that is provided by your local City/Town or Region most of them have FREE programs or donation programs...They are funded by the City and by non-profits like United Way..

The are very professional and extremely helpful...You're credit rating will take a "hit" but I already presume that yours probably has, or will in the "near" future...Plus, the "hit" that occurs can be easily fixed!

Good Luck,

[jheath]

Does anyone have any experience with debt settlement/debt management companies? Are they reliable and trustworthy?

Over the years I've accumulated a large sum of debt, and I've slowly been paying it off. My debt is spread out over 7 different cards and managing it has become quite difficult. My credit rating has suffered quite a bit and a consolidation loan is not an option for me. My gross salary is $60k/year and I can comfortably put $1,000+ towards my debt but I'm looking to make just 1 payment instead of 7 and maybe lower the interest on these cards because now i feel like I'm stuck in a neverending cycle whereby my payments just cover the interest fees.

Has anyone heard anything about DebtManagers.ca or TotalDebtFreedom.ca?

Thanks...

Haven't heard about the two that you mention, but credit counselling / consumer proposal are what I would call "not even last" resorts. Seriously, what it will do is trash your credit rating and tie you up for usually at least 5 years. At the end of 5 years, you will look as good as someone that has just come out of bankruptcy despite trying to do the right thing and make good on your debts. The other issue here is that you could have filed for bankruptcy, been discharged, and been near perfect again in 2 years. I've dealt with people in the past that have had or been in consumer proposal programs that I believe are similar to what you've mentioned and it's literally like being locked up while it's taking place. No new credit / mortgages / car loans etc. Probably couldnt even get a cell phone contract.
Try to keep up on the payments for 6 months or a year and then maybe you will have rebounded enough that lower interest or consolidation options are available to you.

[Tomb22raider]

Does anyone have any experience with debt settlement/debt management companies? Are they reliable and trustworthy?

Over the years I've accumulated a large sum of debt, and I've slowly been paying it off. My debt is spread out over 7 different cards and managing it has become quite difficult. My credit rating has suffered quite a bit and a consolidation loan is not an option for me. My gross salary is $60k/year and I can comfortably put $1,000+ towards my debt but I'm looking to make just 1 payment instead of 7 and maybe lower the interest on these cards because now i feel like I'm stuck in a neverending cycle whereby my payments just cover the interest fees.

Has anyone heard anything about DebtManagers.ca or TotalDebtFreedom.ca?

Thanks...

Please post the following for each card/debt you have:

Balance
Interest Rate
Min Payment
Total limit

The team here might give you ideas/plan how to attack the debt; and see if it will work for you.....

Whatever debt management companies claim they can do; you can do yourself.

Good Luck

[biggerthanboykins]

i worked for one of these companies for a while. If you have specific questions PM me. Other wise I'll be back later after work to give you some info.

Not all companies charge fees, it will get you an r7 on your credit, their may be better options.

It is sometimes as bad as resulting in an r9 which is similar to bankruptcy.

[srg83]

Whatever debt management companies claim they can do; you can do yourself.

Good Luck

As far as I know, though, if you're being harassed by creditors, and you're in a REALLY bad situation, debt management companies can help with that - they'll contact creditors and get them off your back, which could be something very intimidating for some people.

But I will agree that in general, yes, debt management is something you can do for yourself.

[biggerthanboykins]

Haven't heard about the two that you mention, but credit counselling / consumer proposal are what I would call "not even last" resorts. Seriously, what it will do is trash your credit rating and tie you up for usually at least 5 years. At the end of 5 years, you will look as good as someone that has just come out of bankruptcy despite trying to do the right thing and make good on your debts. The other issue here is that you could have filed for bankruptcy, been discharged, and been near perfect again in 2 years. I've dealt with people in the past that have had or been in consumer proposal programs that I believe are similar to what you've mentioned and it's literally like being locked up while it's taking place. No new credit / mortgages / car loans etc. Probably couldnt even get a cell phone contract.
Try to keep up on the payments for 6 months or a year and then maybe you will have rebounded enough that lower interest or consolidation options are available to you.


Very true, sometimes Bankruptcy is the better option. Instead of paying the debts back you can save the would be monthly payments and by the time it all comes of your credit report you can have a good amount of savings. That is if you are dedicated and not dumb enough to dig yourself back into a hole.

[DanielCarrera]

Do what i6s1 said. His advice is sound. I'd like to complement i6s1's advice a little:

Designate a certain amount that you'll pay toward your credit cards. Make it as high as reasonable. Pay the minimum to all your cards and put everything else on the highest interest card, like i6s1 said. When you are done paying the highest interest card, continue paying the same total amount for your cards, just move the extra payment to the next highest card. The idea is that as your cards get paid, more and more money is used to pay the next card, so the cards get paid faster. Some people call this the "snow ball" or "avalance" method.

The next thing I want to add is that you should make a personal budget. It doesn't have to be complicated. Start by just keeping track of where your money is going. Take a couple of weeks and write down everything you spend (and I do mean everything). Then look at the results. For most people, there is one thing where they are spending unreasonable amounts on. For me, it was eating out. I was spending a fortune on eating out. Once I realized that, I started to look for things that I enjoyed too but are cheaper, like renting a movie at a cheap family rental place, or going out for a walk with my girlfriend, hiking, etc.

Look at where you spend your money and cut everything you can (btw, you should stop using your credit cards too).

[DanielCarrera]

I'd like to add that a loan consolidation, even if it works, is not going to solve the core problem. The core problem is that you have poor money management skills. For a lot of people, loan consolidation makes things worse because when their credit cards are cleared, they just spend money again and get right back into debt. So in the end these people end up with more debt than before. They still have to pay the big debt from the consolidated loan, and now they have all the new debt from all the junk they just bought on their temporarily-clean credit cards.

Any true solution to your problem has to address the root problem and that lies in your money management skills. What I like about i6s1's suggestion and mine is that they work by improving your money skills. In the process of getting out of debt you learn money management, so you'll stay out of debt in the future.

[srg83]

Any true solution to your problem has to address the root problem and that lies in your money management skills. What I like about i6s1's suggestion and mine is that they work by improving your money skills. In the process of getting out of debt you learn money management, so you'll stay out of debt in the future.

Great point. For almost two years I was floundering...then when I decided to actually get my act in gear, and read up on different debt elimination methods, I noticed that the way I was handling money changed for the better. I still have to convince my gf (I hate store cards - and she got one recently) of course but hey one step at a time.

[DanielCarrera]

Great point. For almost two years I was floundering...then when I decided to actually get my act in gear, and read up on different debt elimination methods, I noticed that the way I was handling money changed for the better. I still have to convince my gf (I hate store cards - and she got one recently) of course but hey one step at a time.

I had a very similar experience. I used to be terrible at managing my money an I was massively in debt ($36,000 in student loans and credit cards). Then I decided to eliminate my debt asap. In order to do this I had to learn how to manage my money. I made a budget, I kept track of expenses, read books on finance, etc. 18 months later I was debt free and today I have an excellent control over my finances. I am debt free, I know where every dime goes, and I have a budget and I follow it to the letter. I am totally in control. And all that is thanks to the work I did in trying to get out or debt.