Debt Management - Strongsville,OH

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Next.. do like others have recomeneded or also look at Suzie Orman. Both Dave and Suzie have done very well. I think my husband and I have a mix between the two of them.

If you want it, it is worth it.

Cash for everything, if you don't have the cash.. you do not need it.

Good luck.

A.:

Welcome to mamapedia!!

I would suggest that you go to the library and borrow books from Dave Ramsey or Suz Orman. You need to get control of your finances, not them controlling you.

Debt consolidation? What difference will it make? You are paying someone else to pay your bills? Heck - if you want to do that - I'll do your bills for you. You can pay me and I'll contact your creditor and set up payment arrangements with them....you know this is something YOU can do - right?

Debt Settlement? Yes, I settled a debt - it was a major pain in the rear. And if it's over a certain amount - you will be paying taxes on the amount as "income".

If you are being sued for debts - and you cannot pay your bills - you might consider bankruptcy. Think long and hard before you do it.

What would I suggest you do other than Dave Ramsey? I would gather EVERY SINGLE bill I have - mortgage, car, credit cards, electric, gas, etc. and put it all in a spreadsheet.

Then I would look at my LES (leave & Earnings Statement) and that of my spouse as well. If it's a salary - and not commission-based - then you have stable income to work with.

Then prioritize my budget. Do you know how to put a budget together? If not - there's the first problem with your money situation. The most important thing in your budget should be your living expenses...
mortgage
gas
water
electric
Car payment
automobile gas
car repairs

You get the gist, right? Call your gas/electric/water/sewage and find out if there is a flat rate fee you can switch to. This will help you budget better as well.

Then you need to find out if you can afford your car. Worst case is call and refinance the payments. Yes, it will make you pay more for your car in the long run but will lessen the payment NOW. Or you can find out your loan balance, what your car is worth - if it is worth more than you owe? Sell it - for a car that you have NO PAYMENTS on.

From this point forward - you are a CASH ONLY family.
Define WANT vs NEED - NEED is something YOU MUST have in order to live - roof over your head, food, water. WANT - is just that - WANT.

You do NOT need a new outfit every week and you don't need a designer handbag. If you feel the need to shop - go to a consignment shop or Goodwill.

No more going out to eat. Sit down and make a menu for the week. Shop off store fliers and coupons that you have. Use what you have on-hand.
If you have a back yard - start a garden and grow your own veggies.

Instead of trying to shove your responsibility off to someone else - get control of it yourself. Many of those who participate in debt consolidation programs find themselves in the same mess because they didn't learn anything...and lack self-control.

If you are unemployed and have run out of benefits? If you own your home - consider a short-sell or selling your home so that you can get out. Find out if you can live with family while you are looking for employment.

Bottom line? you need to be responsible for yourself. You need to pay your debts and you need to learn to control spending. CASH ONLY. If you can't pay cash for it? You don't NEED it.

Good luck!

I looked into both after my divorce. I don't recommend either, because you have to pay for that service. Can you afford to pay yet another debt? Consolidation looks AWFUL on your credit report. Far worse than working with your creditors to pay off your debt.

I do recommend going to the library and looking at books by Dave Ramsey. You CAN get a handle on your debt.

Also, don't avoid your creditors. Read the book, create a budget, and make a plan on how you're going to pay, and call them with your plan. Let them know that you fully intend to pay your debts in full. They WILL work with you, because they want their money! Don't let them talk you into anything more than what you have already decided. "I can pay this much per month and that is all."

You can do this, A.. I know it seems like someone is telling you to eat an elephant....but you can. One bite at a time.

Geez I had a lengthy answer typed out and it was swallowed by the bowels of the internet. Nooo!

My short answer is NO. Do not use a DMP.

Many are actually scammers and will take your money and NOT return creditor phone calls, letters, emails and faxes. Eventually they might close up shop, making it so you cannot even contact them to find out what happened. I have seen this happen 4 times this year with some very well-known and heavily used debt management agencies, we have also seen evidence that they may have been selling customer info to cause ID theft.

At best you can expect a DMP to collect money from you- sometimes a monthly maintenence fee or an up front payment that takes 1-3 months of payments. Then after that your monthly payments go into an account to accrue until there is enough for the DMP to make a settlement offer to a creditor. This process is lengthy and many creditors are not willing to wait this long nor accept a settlement. By the way, DMPs often promise to settle your debt at 50% or less but creditors are not required to agree to this! Some might, but at best you can hope for a few late fees to be waived.

So what happens then? Well, you have no communication with your creditors because they received a cease communication letter. So you have no idea if an account has been paid or if credit reporting is about to occur or if the account is about to be sold to an outside collection agency.

You can pretty much do what a DMP does, for free. You can send your creditors a cease communication letter if you wish. You can call and ask for a payment plan or settlement (get the offer in writing). I do not understand why anyone would pay for this service- in fact I know they would not if they truly understood not only the risk but how little DMPs do for them. DMPS are so busy these days- lots of clients- and have no time to really help you one on one. As a creditor, I might call a DMP with a concern about an account ("hey, if this is not paid by this date, credit reporting will happen") and the best I can get is maybe they will send the client a quick email.

Let me know if you have any other questions.

Not everyone can do debt consolidation because it is getting one loan for all your debts. If you don't have good credit no one is going to take on your debt in that manner.

Debt settlement is what you would get from the consumer credit counseling type companies. Most of the time all it is is a restructuring of your debt through the current holders of that debt with you making a single payment to the company that helped the restructure. It tends not to allow for the reduction of principle but can reduce accrued interest and late fees. It works on the premise that a company will forgive profit to get their principle back.

I had a family member do consumer credit counseling years ago. At that point it did not effect your credit and no one came back later for more money.

Beyond that you are talking about bankruptcy.

I would suggest Dave Ramsey, we have paid off so much debt. Depending on your beliefs he has a book called the Total Money Makeover which seems to be geared towards non Christains. If you are Christain (even if you are not) he runs a class called Fanancil Peace University (FPU) which is about 9 wks. On his website he has a class finder option. The key is to get on a budget and stick to it, this will help change habits which is key to becoming debt free and paying off debt.

I have not been in your situation. We are big planners and believe in debt free.

However, I discourage anyone from paying someone to do something they can do themselves.

Debt companies are in business to make a profit because to them, it is their business.... therefore their #1 interest is their bottom line profit, not you personally.

You know who you owe and why. You can make the phone calls to the companies involved and set up your own plan for repayment.. Many people will be willing to work with you one on one when you are taking responsibility and trying to fix the problem.

You can go to your local library to review books by known financial advisors who are there to help those who need to better understand finances and budgeting. I have not used these programs but Dave Ramsey and Suze Orman are 2 good resources.

CUT UP any credit cards you have and DO NOT use CREDIT. Cut back on things you need vs want. Use delayed gratification as a means to determine your want/need.

From another standpoint.... we are business owners (raw materials) and we do have a couple of customers who cannot pay in the 30 day terms we have. Instead of punishing them, we do offer a discount if they do pay in 30 days. We have 1 customer who can only pay in about 45 days but they ALWAYS pay and we have had a long standing relationship with them. We have another customer who just does not understand how to run a business and we will only sell to him at Cash in Advance. It is agreed upon between the both of us.

My point... be upfront with your creditors and work out a plan. This way, your creditors are paid and there is no middleman making money off you and your creditors in order to "consolidate" for you.

Best wishes to you.

ETA: What is the point of the snarky SWH. You asked for help and you got a lot of good, solid advice. Sheesh

We tried to use a local credit counselor through the credit bureau. They had us sigh an agreement to give them $1300 per month and they'd pay our credit card debt. They made agreements with the vendors that would work with them. Wards did not work with them. So we still had that bill to pay.

We also still had our house payment, car payment, gasoline, utilities, food, and anything else that was not a credit card payment.

We couldn't buy groceries or meet our other bills like that when we gave them over half our bring home.

So we had to cease the plan. We did go to some classes that were very informative and that taught us a lot about how to manage our money differently. We tracked our spending for a month and I was totally surprised!

In tracking you keep a record of each and every penny you spend. If it's for a $.25 pack of gum you write it down. If it's a gallon of milk from the Quick Trip you write it down.

This way you can see where your money is really going. One of the people in our class found they were spending nearly $300 a month on 7-11 coffee. That's a lot of money blown. They decided to buy a Keurig and make their own coffee that was the same as the 7-11's. They still spent a lot on coffee but it was less than half. A few other coffee drinkers decided to buy a plain coffee pot and they never planned on buying coffee from anywhere again.

So by going through this counselor and taking the classes I did learn a lot. Mostly that those credit card companies are willing to work with them because they are guaranteed a payment of some sort, to get payments like this they'll often tell the debt controlling person they'll stop interest charges to give incentive to the person they're trying to get into the program. This way it gives the person who owes the debt a good feeling to go that extra mile and tighten the belt a bit more and continue giving the huge chunk of money to the counselor and working with the program. The program pays each one something and uses the rest of the money to pay one off or make a huge payment to one.

I found out as much as I could about handling my debt myself. The first step I did was cut up the credit cards. The second thing I did was develop a systematic way of paying down and off my debt. The Third thing I did was stick to the plan.

At one point I did use a debt consolidaiton company to pay it down and they did a great job and was easy to work with without costing a fortune but you must do your homework / research.

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Now that I've answered your questions, I'll give you my opinion and the philosophy that's worked for us.
Become a cash family.
If you don't have the money--don't buy it until you do.
A financial mess can be cleaned up the old fashioned way. Pay it.
For as long as it takes.
Same way you eat an elephant--O. bite at a time.
And to continue to use credit after a CONsolidation? That's what those in the biz call "financial suicide"!
Get a Dave Ramsay book and start at Step 1.
It will be painful, but can be done.
Signed,
Debt Free Including the House!