I have roughly 40k in debt over a few credit cards and a personal loan. I have been making payments on time and actually am not behind at all on any payments. I will be buying a home soon and am worried that all my bills will make things very tight. I was thinking of going the debt managment route as I really dont want to get yet another loan to consolidate. I'd like to just have one monthly payment with a reduced balance on what I owe the various companies. My credit rating is good, middle of the road but still good. I'm new to this and would like to hear some options/opinions.
Jrzy, You need to be careful if your new home is not yet purchased. Soemtimes if you join a debt management company they will have you sign an agreement saying you will not open any new lines of credit or loans. If you do they will knock you off the program. I am not positive but debt management may show up on your report, especially if they settle the debts for less.
There is a really knowledgable person here (Carol) that will be better able to assist you on this topic. Hopefully she will stop inand join in on this post.
Debt consolidation is a tricky thing. You have to do some research and find a reputable company. I know that there are some terrible ones. You send money to the consolidation company and they disperse it to your creditors. That being said, they can screw you and not send your payments on time. Ruining your credit. They can negotiate better terms on any cards/loans, but at the same time, I've known companies that will only help if you are delinquent 60+. You can't use them as a preemptive strike. If you join a debt consolidation company, the tradelines in which you include will be marked on your credit. Lenders will see this when they pull your credit. Often deterring them from granting a loan. If you are having trouble or fear trouble and your debt to income ratio isn't good, a mortgage lender is going to decline. Plus you said that your credit is just ok. What percentage of your allotted credit limit are you currently using? Is there any room to do some credit card balance transfers to a low interest rate card? Or do you think that you would qualify for a lower rate credit card with no balance transfer fees? If you have store cards @ 30% and high balances that would be a huge help.
Card balance transfers can sometimes be a real life saver. A couple years ago I was in an accident and could not pay off a credit card before the zero interest kicked out so I rolled it over to another twelve month zero interest card. This could work for you if your credit is good enough. If the debts are really high you may want to get that house and then take out a home equity lone of credit which would be much cheaper.
Your personal details (name, email address and phone number) will be delivered to the company advertised on the Creditmagic after ve agreed to go for the counseling session by filling out the no-obligation form. However, it is your discretion to accept or reject their services.
Not all the creditors/debt collectors agree to trim down the outstanding balances, interests, and fees payable by the consumer.
Consumers working with the debt relief companies can still be sued by the creditors/collection agencies.
Debt relief services may have a diminishing effect on the creditworthiness of the consumer. The total outstanding balance may increase as the additional fees get accrued.
The overall amount saved by the consumer through the debt relief services is considered as taxable income by the IRS.