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Q: What do you think about Debt Counseling?
Many people have different views on getting help to pay debt thru a debt consolidation program. Some say it's a con some say it's good. I am currently with Care One and was thinking about stopping I have about another 2 years with the program. Any advice as to how to stay on top of my debt and actually pay it off, if I discontinu the program?

Card 1= 408
Card 2= 3,000
Card 3= 2,500
Collections= 180

A: Start by looking around a good credit counseling company, and not become a victim of one of the various credit counseling scams that are prevalent today. Do not be misled by any ad that assures you quick fixes for your credit report. This is an impossible promise. Instead search for a honest company accredited to Consumer Credit Counseling Services. Then fix a meeting with a professional credit counselor, and apprise them about your debt situation. Do not omit anything as they will require the entire information to draw up re-payment plan according to your situation.

Q: If you were in my situation what would you do?
So I owe about 12000 in debt for credit cards, the accounts are in a debt consolation company which I'm paying about 400 a month to clear the debt, I recently came into $8000.00 and I want close the accounts and pay them all off. IS there a way I can negioate with the creditors to lower my balances since I'm paying it off?

A: Generally if you are current, companies will not settle on the account. You actually have to be behind before they start to make arrangements. Since you are on a program currently you are considered current so they probably will not accept a settlement. However, there is nothing that says you can not ask and see what they will do.

If you do get them to settle for less, any amount over $600 you will receive a 1099-C and it is considered unearned income. So if you had a $5,000 debt and they settled for $4,000 you would owe taxes on the $1,000

You might be better off to pay off as many of the accounts you can with the $8,000. Then continue to pay the $400 a month on the remaing cards. Since you have less cards you will be paying more on each one so those amounts will go down faster.

A2: Yes. There is no way that I can explain this without having to write a book. I'll try my best.

Creditors are willing to "settle" with you if you have cash to pay upfront. In the business world, money now is worth more to them than later. And it also increases the chances of them getting some of the money than none. Following me? 10,000 can be settled for 5,000 and higher amounts for pennies on the dollar.

Important Tips

Never mention that you have "money". If you do, chances are that they will deny your settlement because you have enough to pay for the whole debt.

Get everything in writing. If they are willing to settle, make sure you get that in writ ting. Write a check and have "PAID IN FULL" along with any other information that may help you if there is a dispute.

There are many do's and dont's to settling your debt. Please do as much as you can to educate yourself. Find out where in your community you can seek free debt counseling

Q: Would going through a Debt counceling service be better than going through an Accountant?
I filed for bankruptcy nine months ago. Now I am rebuilding my credit. I no longer have any debts whatsoever because everything was discharged in bankruptcy. (If you go through credit counseling you will still have to make payments every month and this might go on for years and years. Can you afford to make these payments?)

A: For most people I think credit counseling doesn't make any sense. It's a great business for the credit counseling agencies, which usually keep a percentage of what you pay to the credit card companies. Also, if you pay any creditor less than the amount you owe it damages your credit. (The credit counseling agencies usually keep whatever you pay to your credit card companies for the first month as payment for their services.) Keep in mind that the credit card companies do not have to negotiate your debt.

I was in the same situation and I thought it was best to go bankrupt. Go and speak with a bankruptcy attorney. You really need to look at all of your options.

Because I no longer have any debts I am now a much better credit risk and the credit card companies are mailing offers to me. I really happy that I went bankrupt. If I had gone through credit counseling I'd still be struggling to pay my bills.

I wish you the best of luck. I understand the tremendous amount of stress that you are under.

Q: I have about 20K in Credit Card debt. I have no problem in making the monthly required payments. I thought about taking a loan and then paying the loan off, but I don't know who will give me a loan that big considering that I only make 30K per year. I have a very descent credit score (above 600). What is my best option to get rid of this debt? I am very skeptical about those debt consoldation companies.

A: Cut the plastic in half, then set a goal to eliminate both halves. When you find yourself in the hole, quit digging.

You need to cease use of the cards, list all the balances highest to lowest. Pay the minimum on those at the top, use a debt snow ball to pay off the smallest first.