In 2004 I was contacted by a consolidation company, Federated Financial, who asked me if I was interested in consolidating my credit cards. I had about $8,000 in credit card debt at the time. I wasn't behind on any of my payments but my fiance had just been laid off and I wanted to get my credit cards paid off before I got out of law school. They told me they would lower my interest rates and I would be out of debt in 3 years. My first payment was taken directly from my checking account in August 2004. In September I started getting phone calls from the cc companies asking where my payments were. I told them I had joined a debt consolidation company and they were handling my payments. I called Federated and told me not to worry because they had sent out all my proposals and were paying all my creditors. I had noticed I was getting charged late fees and over the credit limit fees. Federated told me not to worry because after three months of consecutive on time payments, all fees and negative marks would be removed from my file. So, I decided to check my credit report and I was livid. I had six months worth of 30 day late payments for each of my credit cards and my score was in the dumps. I called Federated and they acted like they were shocked. I asked if these negatives would be removed since I had been making on-time consecutive payments for about six or seven months. Of course none of the late fees were waived, none of the over the credit limit fees were waived, and none of the negative marks were removed from my credit file. Apparently, Federated kept my first payment in August as a fee, didn't tell me, didn't pay my bills in August, and that started the snow ball effect. I sent letters to all of the cc companies but got no response. I called each of them and explained my situation but none of them would do anythign to help, except for Citi Bank who deleted all negatives from my credit file, removed all the fees and were really understanding. Then, because my credit was completely ruined, I couldn't get any private loans for law school. Money was tight because my fiance still wasn't working so I took out a payday loan. Then I took another one to pay for that one, and the vicious cycle began. I kept up with the numerous loans until I just couldn't live anymore. My entire paycheck was being taken from payday loan fees and they were just the rollover fees - none of principal balances were being reduced. So, I decided to try to get a $10,000 loan to pay for school expenses and pay off these payday loans. I was contacted by Westgate Corporation who said I had been approved for a $10,000 loan. They had me fax over copies of my DL, SS card, paystub, MY ENTIRE LIFE. Then they faxed me a contract, which looked legitimate, and I signed it and sent it back. Then came the catch. Because of my poor credit score, I would need to purchase disability insurance for $900 so if I lost my job or got hurt my loan would be covered. I borrowed more payday loans thinking I could just pay them back when I got my loan. I sent the money via MoneyGram and when my money wasn't in my account the next day, I called them back. They said the woman I spoke to had miscalculated my insurance and I needed to send in another $600, which I did. Soon thereafter, I realized it was a scam. I was in shock. I work in a law firm and am pretty intelligent and just couldn't believe this was happening to me. Of course, since I didn't get the money, all the payday loans caused my checking account to go into overdraft and I had to close it. I thought things were bad then, but now they were even worse. I had payday loan companies and collectors calling me 10 times a day at work, leaving messages on my VM, and even calling and harassing my parents. My work was nice enough to give me a $5000 loan to pay some of my debts off and so I wouldn't get sued but by this time, with the thousands of dollars of payday loans and thousands of dollars of fees they tacked on to my balances, it still wasn't enough. I used the entire $5000 to pay some off and make payments on others. I worked out manageable payment arrangements with some companies and others would accept nothing but full payment. As if that harrassment wasn't bad enough, then I started getting people calling me, like Ellis & Crosby, stating that they were going to arrest me if I didn't pay. Ellis was the first one who called me and gave me that line of BS so I fell for it (being in law school I didn't want a criminal record) and I borrowed money from my parents to pay them. Then I came here and other forums and found out that what they did to me was illegal not to mention they sold my information for the same debt that was now paid to other sharks who to this day, every few months or so, call me from a different company threatening to put me in jail. I sued Ellis Crosby for violation of my FDCP rights and but they filed bankruptcy. I finally paid all the payday loans off recently but it ended up costing me thousands and thousands of dollars more than the money I borrowed. For instance, I borrowed $400 from PaydayOk which is one of the cheapest at $10 per hundred dollars borrowed, and I ended up paying them $1377 dollars for a $400 loan. Sonic Payday was by far the worse because they refused to allow you to make payments and threatened to garnish my wages. Tremont Financial threatened to garnish my wages for $60 that I refused to pay because they charged me for more fees that was listed on my contract. I ended up paying it because I didn't want to be embarassed by having them call my work to garnish my wages for $60. My advice to those who are having financial problems is this: debt consolidation does work but you need to check into the company before joining. Make sure they send you statements about where you're money is going on a regular basis. Make sure they aren't charging you hidden fees or not making your payments on time. NEVER TAKE PAYDAY LOANS. You may think that they will help you but they will not. You will end up paying more money than you think and it will begin a vicious cycle that will be hard to get out from. Lastly, NEVER send money in advance for a loan. This is called advance-fee loan schemes. I hope that my experiences will save someone else from making the same mistakes I did and learning the lesson the hard way like me. I still struggle financially but I've learned how to manage my budget and when money is tight, and I've learned ways to keep my expenses to a minimum. On top of all of that, I've had to maintain fraud alerts on my credit reports because all of my information was taken and I had accounts opened in my name that weren't mine. My advice on that is to pay the $15 a month to have all of your credit files monitored and fix any errors on them. That is definately money well spent. Good luck to all!
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