Internet's first get-out-of-debt community - 129,000 members

I mean no disrespect to this board, this is an honest question. From what I've read on other boards, using a debt consolidation company totally kills your credit rating, by the time most people would think they need a debt consolidation company they are already way over their heads. When you use a debt consolidation company don't the paid debts show "settled for less than the amount owed"?

Posted: Thu Jan 17, 2008 11:37 am Subject:

No, when you use a DS company, you are actually paying back the full amount you owe. The company just works with the creditors to reduce your payments and interest/fee's to help you have reasonable monthly payment amount. But everything you own is paid off in 5 years(usually the program length) and payments are made every month. The settled for less applies if you are using a debt settlement company, which is a completely different thing. This is when you stop making payments to your credit cards and try and settle with them for less than you owe, normally 40 - 60%. This will then show up on your credit report as "settled for less"

With either option your credit will still take a hit, although with the settlement if you can settle these in one or two years, you can start rebuilding your credit quicker. With Debt Consolidation you have to complete the program.

Posted: Thu Jan 17, 2008 12:19 pm Subject:

jb2007 is correct. You credit will take a small temporary hit in a consolidation program but a settlement will remain on your credit long after you complete it.

Posted: Sat Jan 19, 2008 10:02 pm Subject:

Ditto JB2007 . You WILL see a reflection on your credit report. However, by the time you are done with debt settlement (24-36 months) you are only half way through with cccs (60 - 72 months)or debt consolidation. With debt settlement you can begin rebuilding your credit sooner. ANOTHER NOTE, according to most lenders/creditors (because I was in the business for 7 years), a CCCS (Consumer credit counseling) is considered the same as a Bankruptcy! A "settled for less" is disregarded after 1-2 years old and late pays are only looked at within the past 12-24 months as well. So you are better off with Debt Settlement in many ways.
--Better for credit re-building; sooner, lenders dont view it as serious as BK or CCCS
--Save 50% on mo. payments--more cash flow
--Payoff Debt in 24-36 months
--Eliminate interest, over charged fees, etc..
--Reduce/Eliminate Creditor Harrassment if applies.

Keep in mind, your focus is to become debt free first. Your credit is second priority. Many will try to keep thier credit A+, but when it comes to financial freedom, they are strapped to a ball and chain. Get rid of the debt and your credit will get better automatically just because your debt to income ratios increase! Good Luck and God Bless.

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using a debt consolidation company is a bad thing?

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