Debt counseling & services

[dcss1205]

We are looking for thoughts & ideas regarding debt counseling for the Family Idiot. Have heard stories of non-profit advisors who are less than honest, so to say. Looking to pay down municipal tax debt & reduce credit card interest & penalty. CC debt has been transferred to a collection law firm, who does not return calls.

[Moonraker]

I assume links at the top of this page, triggered by the keywords, are creditable, But you should ask Malloy.

[WillABro]

Debt counseling, in my experience, is synonymous with debt management. Basically, a company will negotiate on your behalf (for a monthly fee or percentage) to lower and freeze interest rates and consolidate all of your payments into one monthly payment made to their organization and they pay your creditors on your behalf. Having a debt management plan on your FICO score is considered negative, but not as negative as late payments and collections.

Debt settlement is the one to watch out for. That's where you work with a company and stop paying all your debtors and make payments to the company representing you. The idea is to have them negotiate a settlement with your creditors. All the while they are making money off of you and there is no promise that creditors will settle. Many people find themselves being sued and garnished for the amount they owe. The idea is debt settlement allows you to pay the company representing you. They keep their percentage and save the rest in escrow, or wherever. And if your creditors accept they pay them the settlement accumulated from your payments. Very risky and a lot of scams with this sort of thing.

There can also be tax consequences to debt that is written down/off since IRS code considers the forgiven debt a monetary gain.

You can do either one on your own but many people don't know how. Thus the market for these two organizations.

I am hoping to learn more details from other posters. So, please correct me where I am wrong.

[Jayfar]

There's many bogus credit repair and counseling firms. Beware the ones who advertise on KYW radio and change their name every year or so after the authorities catch up with them.

The former Consumer Credit Counseling Service of Delaware Valley, now known as Clarify, is legit however.

About Us | Clarifi - Consumer Credit Counseling Service of Delaware Valley (CCCSDV)

[toxigal]

We are looking for thoughts & ideas regarding debt counseling for the Family Idiot. Have heard stories of non-profit advisors who are less than honest, so to say. Looking to pay down municipal tax debt & reduce credit card interest & penalty. CC debt has been transferred to a collection law firm, who does not return calls.

I used consumer credit counseling in my early 20's and it was definitely good for me.

start with consume credit counseling. a legit company should not just right into debt management, but should first go over the budget completely and determine if debt management is the best option.

debt consolidation is generally NOT recommended.

be aware that with debt management you are generally required to cancel all credit cards and cannot open a new one while enrolled in the program. while this is really a good thing, it can cause issues if you need to travel for work and have to maintain a credit card to do so.

start here:

National Foundation for Credit Counseling

double check with BBB and USDOJ: U.S. Trustee Program » Credit Counseling & Debtor Education Information

[funk]

here's an alternative:
Personal Loans and Online Investing - Peer to Peer Lending - Prosper

on the other side of this, i own a traunche of loans that pays a nice 9.5%. risky for me, but it hasn't failed me yet.

[MEDUSA]

Probably the best resources (prosper was created within CB)

CreditBoards

National Association of Consumer Advocates | Consumer Protection Advocates and Attorneys - Help for Consumers