Is debt consolidation as bad as a collection?
I am $12,000 in debt(4 different cards), with interest rates as high as 30%..If I continue to pay even just the minimum payments, I am going to be broke. I have never had a 30 day late payment, and can’t stand the thought of it. I do have an auto loan on my credit report, that will not default. Even with credit collections, will having that current account help? I am 21, so i know it will all be gone by the time I am trying to buy a house, etc. But I am worried I won’t be able to get an apartment, another car loan, etc. Should i turn to credit consolidation or debt settlement? Or would that be just as bad as letting the accounts charge off? Any suggestions?
Tags: debt consolidation, debt settlement, credit collections, current account, Debt, minimum payments, Collection.Related posts:
With those kind of balances, you may not get a charge off. They may try to file a civil suit against you.
My suggestion would be seek advice (initial consultations are free) with a bankruptcy attorney. You can file BK, have all your non-secured debt wiped out and still keep your car and make payments on it. If you don’t feel comfortable with it, you’ve lost nothing since your first visit is free.
I filed BK, and have had no problems getting credit. Just keep making the payments on your car and that will help build your score back up.
Also, the BK stays on your credit report for 10 years, but you can buy a home after 3 years paying the same rates that someone that has perfect credit pays.
I’ve heard the debt consolidation places ruin your credit just as much as a BK, so why bother still trying to make your payment to them for 3 – 5 years?
Good luck!
If you enroll in a debt consolidation program, all of your debts will eventually go into collections. You have to understand how settlement works.
Once you enroll into a debt settlement program, all payments to your creditors are stopped. The thinking here is that, once the payments are stopped, the account has about 6 months or 180 days before it is “Charged Off” of the creditors books. This just an accounting transaction on their books which means that they have written off you debt as a non-recoverable loss.
Once charged off, the debt is handed off to a collection agency for almost pennies to the dollar. That is why you notice that a 3rd party collection agent is almost always more aggressive than the original creditor.
It is also at this time when the collections agency is willing to negotiate a lower payment to satisfy the total balance.
Having a current auto loan account is not going to make any difference. Your credit will be bad as long as you are enrolled in the program and even a 2-3 years thereafter.