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Discussion Starter #1
Anyone have any experience with credit counseling?

Like Christian Credit Counseling? Non-profit organizations where they get your interest rates down and help you pay off your unsecured debts? Supposedly without hurting your credit score...
Just wondering....
 

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me and Kim did this years ago (13-14 maybe) after we were first married, they took over paying all our bills, they make you cut up your credit cards and they devise a budget for you to live on, it is very tight but it did work, we paid off close to 20K in a couple of years (which was alot when we were 18-19 years old at the time) however be a little cautious, most of them say they will "negotiate" with your creditors, lower payments, balances, etc, I think a few of ours quit charging finance charges, reduced the debt to an agreed amount BUT a couple of them did not, and we were reported as slow payers, also one of them reported it as a discharge, even though we paid it off, that hurt a little, alrthough all in all it helped us in the long run and we learned alot from it but do make sure it is one of the non-profit ones and one that has been doing it for at least 3-5 years, there are alot of for proffit scam ones out there these days
 

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Traci, I have no personal experience but if I am ever looking for financial info I like Suze Orman:
Suze Orman Resource Center

Or what about your United Way? Do they have an agency that does credit counseling? Also, I think there is one consumer credit group that seems to be on the up and up and it is Consumer Credit Counseling Service. Here is some info about it from a consumer finances web site. Suze Orman mentions this one, too.
http://www.stretcher.com/stories/980413a.cfm

Here's good article that discusses counseling: http://www.bankrate.com/brm/news/cc/20010112a.asp

This a rather blunt article on the subject:
http://www.bendover.com/gmtquestion.asp?faq=5&fldAuto=238

Thinking About Using A Credit Counselor? Who's Going To Protect YOU?

"I owe the money so I've gotta pay it back." Sound familiar?

............ Wanna try credit counseling? Is it really counseling, or is it simply another form of a debt collection agency designed to give you a warm and fuzzy feeling? There's all types of credit counselors out there to choose from today:

There's the most familiar of the group of credit counselors that advertise heavily on television, on the radio and on billboards. You know the ones that love to thump their chests and brag about being a "non-profit" agency.

Many of their representatives (when cornered by anybody with a wisp of knowledge about how they work) tout that they're supported by "tax deductible donations" from companies in your town or from across the country. Tax deductible, huh? If you work for a company and they pay you a salary or commission, that's a tax deductible expense, too. It's smoke-and-mirrors, folks. They're debt collectors and they want you to let them collect your debts. Sounds like the wolf in sheep's clothing.

There are credit counseling agencies that tout religious affiliations. There are counseling agencies that sound like a newer version of some of the older organizations. There are credit counselors popping up like toadstools after a spring rain. And there's a reason. It's a profitable business that's growing exponentially thanks to the sloppy lending practices of a bunch of extremely greedy banks. Have you figured out that non-profit doesn't mean it's a charity?
 

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Discussion Starter #4
This is the particular one I am referring to.Christian Credit Couselors
It sounds good. Has been in business for many years.

They state it doesn't adversely affect your credit score, and that people have actually bought houses and cars while in the program.
I have seen the ones on tv that look like scams...I am very leery...that is why I am asking questions to see if others have had experience good or bad.
 

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Discussion Starter #5
Also being considered is the Dave Ramsey, Debt Snowball....but without getting interest rates lowered, that could take FOREVER.
 

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Hi Traci! I'm soooo glad you brought this topic up.

Here's our experience:

Traci & I have in the past been "maxed out" on unsecured debt. We had 18,976 that we had to get paid.

First we considered "debt counseling". I spoke with 6 different agencies willing to "help". One called one night and I could here this girl whispering to others that we were in excess of the 10K debt. That made me mad.
I asked her what she was talking about and she denied it. She said that there were MANY counselors in their call center and I must have heard one of them! YEAH RIGHT. Finally, I spoke with a lady who seemed very compassionate. She was an older lady and I told her what'd happened, and said, "listen, I want it up front and blunt... will this, yes or no, look negative to potential future creditors, esp. when making a major purchase (IE: Home). She said Yes, and that if I wanted to avoid ANY problems in the future, then I would need to stay clear of a "counseling program". She told me that it was excellent for older people that knew that the home they lived in would be where they were living when they died, that had no desire to purchase a new car (someone who was happy with the 30 year old car they had), and the only creditors they owed were credit cards, and if that person was on either fixed income or limited income. I said thank you, expressed my gratitude, and hung the phone up. I've not called on since.

THEN... we went to Dave Ramsey classes. This was interesting. We learned a lot. This was not quite what it's built up to be. We watched Dave on a television inside a classroom at one of our local churches each Sunday afternoon from anywhere from 90-120 mins. We paid $90+ for our financial peace kit. It normally run $100+ but the church managed to get a discount, and they passed it on to us. This 13 week program WILL NOT get you out of debt. It has some wonderful aspects, but IT IS based on a lot of WHAT IFs and IF YOU CANs. I would be happy to share these ideas with you from time to time, or if you just want to know what Dave says about a particular subject, just ask me. I've got several of his books and his kit. But that's why he's doing this..... to sell you the kit..... that, the books, audio tapes, and every other dave ramsey item is how he makes his living. He does it to feed himself and his kids.....not because he loves you.

So, using some of the principles we learned from Dave's classes, we managed to pay off some small debts - - - then we obtained a home equity loan, which allowed us to pay off the high interest rate credit cards that wasn't benefitting us tax wise, and we paid off all credit cards and shredded every one, except for just 1- - it's our emergency relief only in a TRUE EMERGENCY. What constitutes a "true emergency". First, let's define "emergency". Emergency- is any situation that jeopardizes the outcome of one's life or property. Example of true emergency. Say child is hurt / ill and needs medical attention, possibly at a hospital 100 miles from your home. Obviously you will be there with your child. But during that time, you've got to worry about certain expenses such as hotel, food, maybe purchases an outfit or two if you rushed up there, and other necessities. Then use the credit card, but PAY IT OFF when the bill comes in. If you don't pay it off, DO NOT USE IT until that balance is ZERO.

I've got soooooooo much I could say about this topic it's unreal.

Since we have done this Traci, we have managed to purchase another home and rent it out. We used some of the money from our home equity as a down payment. Our monthly mortgage payment is $200.19 plus and extra $70 which goes toward escrow to pay taxes & insurance.... total monthly payment $279.19 Our rent we charge is $350.00 - - each month we pay an additional $30.00 in principal- - - which on a 30 year mortgage, cuts it into 19 years. Right now we are looking at this investment LONG TERM, and because of the tax write off, we have a long mortgage. Should this investment been just a short term thing, example: buy, pay for 5 to 10 years and then sell to collect the profit, then we'd shortened the mortgage term by half, paid $330/month and rented it out for $400. and in 7-10 yrs, we'd sold the 32,800 house we bought (which btw appraised for 39,600), and we'd of sold it for 45,000, paid off our remaining $12,000 mortgage and stuffed $33,000 in our pocket. But because of children this is a LONG term investment, and we just put excess rent money into an account, designated solely for the rental business. Right now it will pay unexpected expenses and our mortgage payment during any vacancies, and maybe some day the excess rent money will be used as a down payment toward another rental house.
 

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Discussion Starter #7
Originally posted by scottchelf@Aug 14 2005, 02:17 PM
Hi Traci!  I'm soooo glad you brought this topic up.

Here's our experience: 

Traci & I have in the past been "maxed out" on unsecured debt.  We had 18,976 that we had to get paid.

First we considered "debt counseling".  I spoke with 6 different agencies willing to "help".  One called one night and I could here this girl whispering to others that we were in excess of the 10K debt.  That made me mad.
  I asked her what she was talking about and she denied it.  She said that there were MANY counselors in their call center and I must have heard one of them!  YEAH RIGHT.  Finally, I spoke with a lady who seemed very compassionate.  She was an older lady and I told her what'd happened, and said, "listen, I want it up front and blunt... will this, yes or no, look negative to potential future creditors, esp. when making a major purchase (IE: Home).  She said Yes, and that if I wanted to avoid ANY problems in the future, then I would need to stay clear of a "counseling program".  She told me that it was excellent for older people that knew that the home they lived in would be where they were living when they died, that had no desire to purchase a new car (someone who was happy with the 30 year old car they had), and the only creditors they owed were credit cards, and if that person was on either fixed income or limited income.  I said thank you, expressed my gratitude, and hung the phone up.  I've not called on since.

THEN... we went to Dave Ramsey classes.  This was interesting.  We learned a lot.  This was not quite what it's built up to be.  We watched Dave on a television inside a classroom at one of our local churches each Sunday afternoon from anywhere from 90-120 mins.  We paid $90+ for our financial peace kit.  It normally run $100+ but the church managed to get a discount, and they passed it on to us.  This 13 week program WILL NOT get you out of debt.  It has some wonderful aspects, but IT IS based on a lot of WHAT IFs and IF YOU CANs.  I would be happy to share these ideas with you from time to time, or if you just want to know what Dave says about a particular subject, just ask me.  I've got several of his books and his kit.  But that's why he's doing this..... to sell you the kit..... that, the books, audio tapes, and every other dave ramsey item is how he makes his living.  He does it to feed himself and his kids.....not because he loves you.


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Thanks for the info...

I am afraid of the negative aspects of the credit counseling myself. Especially since we definetely WILL want to sell this house in the near future, and if my husband somehow gets a new job, transfer, promotion, etc. we would want our credit to be in good enough shape to move. We are also going to HAVE to do something with at least one of our vehicles before long.

I think the debt snowball from Dave Ramsey is our best bet...but just exploring other options. We have read his book, the first one, Financial Peace...and they hold classes in our town every so often. We know WHAT we need to do....it is just getting started and actually putting it into action. We have made some very POOR financial choices in the past... -_- I would be embarrassed to say how much unsecured debt we have in addition to student loans, mortgage, car, etc. Our bad choices are now catching up with us financially though....and we really need to find a way out.
Winning the lottery would be nice. A fresh clean start....
 

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Hi Traci

Another web site that you can check is Crown Financial Ministries, at www.crown.org

It is a Biblical base web site, dealing with financial matters.

They got a program in our Christian Station Moody Radio (WMBI here in Illinois) dont know if they got one in your state. You can listen also in their web site, and they got budget counselor that address your own needs, without charge. I totally recomend it.

Hope this help.
 

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Discussion Starter #9
My sister works for a credit card company...in customer service.
She just told me that a lot of times the counseling places pay your bills late...I think Joe had eluded to that. What's up with that?! That would make me SO mad!!!! We have had a couple of late payments, but not late enough to show up on our actual credit report. I think when we got our home loan, our mortgage lady told us that many times they don't report it unless it is a month late. Our if ever late, are only a few days b/c I forget to mail them on time...
Right now we have "good" credit...just "full".
 

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Traci, have you checked to see what your FICO score is? The score not only is based on timeliness of your payments but how much available credit you have. If you haven't gotten a copy of your credit reports, I would definitely do that. Sometimes there are errors on there, too, that you will want to get corrected. I got my report and found several errors. The agencies have, I believe, 30 days to make corrections and to notify you in writing that they were made.

Oh, and a tip from Suze Orman.... if you decide not to use credit cards anymore, do not cancel them. Cut them up, don't use them or whatever, but once they are paid off they will actually help you because they will contribute to the amount of open credit you have. The FICO scoring doesn't like it when your cards are maxed out... it likes to see available credit.
 

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As a mortgage underwriter, I would tell you to be leary of entering into any of these "credit counseling" programs. It will report on all of your credit trade lines...and to a lot of lenders, from an underwriting standpoint, it is considered the same thing as a Chapter 13 bankruptcy and very well CAN affect your ability to qualify for mortgage financing. As long as you are making a payment on your bills every month, a couple days here and there will have absolutely no impact on your credit.
 

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Discussion Starter #12
Originally posted by Kallie/Catcher's Mom@Aug 14 2005, 09:40 PM
The FICO scoring doesn't like it when your cards are maxed out... it likes to see available credit. 

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Then FICO won't like us much right now...
 

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Discussion Starter #13
I definetely have conflicting advice and information about this...which is good, but makes it even more confusing. Some people have pm'd me and said it worked great for them and did not affect their credit scores...and then others have said it can somewhat make things worse.


Keep any more information coming...I will have to weigh the pros-cons I guess...and maybe talk to the actual company with some questions.
 

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Originally posted by tlunn+Aug 14 2005, 10:47 PM-->
<!--QuoteBegin-Kallie/Catcher's Mom
@Aug 14 2005, 09:40 PM
The FICO scoring doesn't like it when your cards are maxed out... it likes to see available credit. 

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Then FICO won't like us much right now...

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The main thing is to not beat yourself up over this. A zillion people are in credit card debt. The cost of living is just so high and I don't think salaries have kept up. The fact that you realize the situation and want to do something about it is all that matters right now. Think about the future and don't beat yourself up for what's already done.
 

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I heard that the best way of beginning to reduce your debt is to try to pay off the credit card with the smallest balance first, because you see results of your sacraficing work sooner. But then I also heard to pay off the credit cards with a higher APR?


~Elegant
 

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May I make a few common sense suggestions? First, go to your bank and speak to their financial advisor. This is a person who can look at your current account balances as well as your credit history. They can then make suggestions on how to pay down your debt. They will tell you how to structure a budget (you can buy a household program that can even issue checks electronically). They will also most likely encourage you to take a home equity (if you own your home) loan. As far as lowering your debt is concerned...you can call your creditors yourself. Ask your VISA or Mastercard company to lower the interest rate on your balance. They may not agree, but at least you tried. As far as paying down debt without a home equity or other such vehicle...take your largest debt...let's say it's $10k on your Mastercard. Make as large a payment as you can afford. Pay the minimum on your other cards until this debt is paid off. Also be sure to cut the cards you have...you don't need to rack up any additional debt. Pay cash for everything. If you can't, then you don't buy it. Another alternative, take your largest % interest rate card and pay that off first...typically these are store cards which can have interest rates in excess of 20%. Make the largest payment possible and pay the minimum on your other cards. The key to any of these approaches is that you must stop using your cards. That means cut them all up...destroy them...don't use them. The last thing you want to do is take a home equity loan, pay off your cards then run them up again! Debt does not have to control your life...nor do creditors. If you are receiving phone calls from debt collectors, simply tell them not to call. You have the right not to be bothered endlessly. Tell them to contact you only by mail. Unsecured debt is just that...they cannot threaten to take away your home, or any of your possessions. Basically you've gotten credit on your name alone, not on any assets offered as security. I would definitely shy away from credit counselors unless they are with a reputable financial institution.

Finally, sit down with a pad of paper and pencil. Write down all of your assets. Include all of your stuff...clothes, stereo, jewelery, investments, property, car, etc., as well as your salary. Make sure you accurately calculate things. For instance don't claim a car for $25,000 if that's what you paid for it two years ago brand new. You will be surprised at how much you are worth. Compare that figure to all of your debt. If your assets are greater than your debt, you'll come out ok. If not, it's time to do some serious soul searching and maybe some begging of mom and dad. And above everything else, remember there is no such thing as debtor's prison....you don't need credit if you pay for everything in cash! You are a person with value, regardless of your credit score.
 

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Discussion Starter #17
Originally posted by saltymalty@Aug 18 2005, 07:23 PM
May I make a few common sense suggestions?  First, go to your bank and speak to their financial advisor.  This is a person who can look at your current account balances as well as your credit history.  They can then make suggestions on how to pay down your debt.  They will tell you how to structure a budget (you can buy a household program that can even issue checks electronically).  They will also most likely encourage you to take a home equity (if you own your home) loan.  As far as lowering your debt is concerned...you can call your creditors yourself.  Ask your VISA or Mastercard company to lower the interest rate on your balance.  They may not agree, but at least you tried.  As far as paying down debt without a home equity or other such vehicle...take your largest debt...let's say it's $10k on your Mastercard.  Make as large a payment as you can afford.  Pay the minimum on your other cards until this debt is paid off.  Also be sure to cut the cards you have...you don't need to rack up any additional debt.  Pay cash for everything.  If you can't, then you don't buy it.  Another alternative, take your largest % interest rate card and pay that off first...typically these are store cards which can have interest rates in excess of 20%.  Make the largest payment possible and pay the minimum on your other cards.  The key to any of these approaches is that you must stop using your cards.  That means cut them all up...destroy them...don't use them.  The last thing you want to do is take a home equity loan, pay off your cards then run them up again!  Debt does not have to control your life...nor do creditors.  If you are receiving phone calls from debt collectors, simply tell them not to call.  You have the right not to be bothered endlessly.  Tell them to contact you only by mail.  Unsecured debt is just that...they cannot threaten to take away your home, or any of your possessions.  Basically you've gotten credit on your name alone, not on any assets offered as security.  I would definitely shy away from credit counselors unless they are with a reputable financial institution. 

Finally, sit down with a pad of paper and pencil.  Write down all of your assets.  Include all of your stuff...clothes, stereo, jewelery, investments, property, car, etc., as well as your salary.  Make sure you accurately calculate things.  For instance don't claim a car for $25,000 if that's what you paid for it two years ago brand new.  You will be surprised at how much you are worth.  Compare that figure to all of your debt.  If your assets are greater than your debt, you'll come out ok.  If not, it's time to do some serious soul searching and maybe some begging of mom and dad.  And above everything else, remember there is no such thing as debtor's prison....you don't need credit if you pay for everything in cash!  You are a person with value, regardless of your credit score.
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That is pretty much the Dave Ramsey approach...
 

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Hmmm...and it didn't cost a cent! I have never heard of Dave Ramsey before this thread, and now I'll have to look him up on the net! Maybe I have a future in credit advice.....
 
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