Young, broke, and worried

Paul,
I'm relatively new here as well, but I can give you some of my recent experience. You say you have a good paying job - which is a plus in your favor. You may very well be a candidate for consolidation, as opposed to settlement or bankruptcy. Don't let either of these two be your first option - if you can try (either on your own, or with the help of someone recommended by this site) to get your creditors to lower your interest rates, amd reduce your payments, you may still be able to get out of this without defaulting (which is what settlement will do - you only pay part of the debt, leaving the creditor with less than you originally owed, and therefore a negative on your credit history). No one can promise that your credit will be repaired if the entries are accurate - which they will be if you have charge offs, delinquencies and defaults that are a result of paying less than you owe. A consolidation plan will help you work up a budget that is realistic, and the counselor will work with your creditors to accept smaller payments, without reporting negatively to your credit history.
If you can't make a consolidation plan work, and you find yourself faced with the other options, my advice is to shop around - don't just search the internet for someone to manage the process - there are many, many, sites out there promising quick relief, without telling you the whole story. Trust me...I've been doing the research myself, and find there are big holes in some stories, where they aren't telling the whole truth - like what will happen in the meantime while you're colllecting money to "settle"!
Finally, from someone twice your age and nearly twice your debt, my best advice is don't let this creep up on you over time - take care of it now, whatever you decide, and move on with your life with a new appreciation for the benefits and pitfalls of credit. Oh, and don't forget to breathe, through all of this.

A few years back I signed up with a debt consolidation firm and it was a nightmare. My bills were never paid, but they kept deducting my monthly payment from my bank account. So, I have a bad taste in my mouth from that experience. However, I may go out on a limb once again if I find a reputable company that won't harm me. Do you have any recommendations? What have you found? Thank you for the advice! :)

Look on the left side of your screen, and you'll see "Our services"...under that header is a link called Ranking chart - that might be a place to start, as it lists different sources by state. Always check with the BBB for references as well. A good consolidation company won't try and pressure you into more than you can comfortably afford, and will explain all the fees and how your creditors will be paid. You should always receive an accounting of where your money is going - and your statements should reflect the payments. I was referred to Coleman Law Offices from this site, and they were very helpful in helping me understand my options. You might check there.

Let us know how things are going!

Paul, your local consumer credit counseling service would be a great place to start. One of the biggest things to look for is a non-profit consolidation service. Referrals from this site's members are as ginnybee14 says a good place to start as well.

Here is a link for CCCS cccsintl.org/index.asp

I'd echo JJ's advice, but with one proviso - make sure the credit counselor is approved/registered/licensed in your state as appropriate, AND that they're on the list of credit counselors approved by the U.S. Trustee:

http colon slash slash www dot usdoj dot gov slash ust slash eo slash bapcpa slash ccde slash cc_approved dot htm (replacing punctuation and deleting spaces as required).

because you now cannot file for bankruptcy without having gone through credit counseling first.

After having gone through the counseling, you may find you don't need bankruptcy. Make sure the counseling is really educating you, though, don't fall for one of those "you have to have this for bankruptcy so pay us and show up for nonsense lectures and we'll certify you" scams.

Virginia legal, great point thanks for adding that, I keep forgetting about that new wrinkle.

Thanks everyone for coming to my aid; I'm blessed. I have complied everyone's advice and took away the following:

1) Don't start with settlement, try counseling first.
2) Seek out a local consumer credit counselor that is approved by USDOJ, BBB, and other legitimate organizations.
3) Review the suggestions by others on this forum regarding good CCCS firms.

After doing some reseach on this site, DOJ, and BBB, I found a firm in Los Angeles (where I reside) called "By Design Financial Solutions". They are recommended and listed by all the right sources, so I have e-mailed them for assistance and will call them first thing tomorrow.

Here's my only concern; the amount of debt I have is $50K and that is a combination of both credit cards and personal loans. Do these firms help with that kind of debt and personal loans?

If it was not for this forum and your advice I probably would have gone forward with settlement and thereby ruin my credit. I hope that CCCS can help me catch up and provide me with a end-solution; getting out of debt! Thank you all and I will follow-up tomorrow with an update...

-Paul

Paul,

It's not that settlement is bad always. It depends upon your situation. It's true that consolidation leaves a better impression on your credit. Once the accounts are paid in full, your report is updated as paid or paid as agreed, whereas, settled remark is detrimental to your credit.

Negative items stay in your report for 7 years. However, paid charged-off is better than unpaid one. So paying your bills is always counted by credit scoring models.

Well, I contacted the CCCS here in Los Angeles and I'm scheduled to speak with someone tomorrow. I also went ahead and scheduled an appointment with an attorney who handles debt settlements and bankruptcy just to be on the safe side. At this point with all the warning signs out there about various debt scams, I'm playing it safe and seeking advice from different entities. Ultimately I have no idea what I will do...

Honestly, there is no easy answer out there from what I see. Credit counseling/consolidation, debt settlement and bankruptcy all have their negative impacts, just some worse than others.

In the meantime I feel obligated to contact my creditors to tell them what is happening re: my inability to pay at this time. Is this a bad idea?

Yes, it's a bad idea. As soon as you put the word out, the vultures will start circling and trying to take nips out of you. It's all business to them, they couldn't care less about your sense of personal responsibility.

Paul, it seems you are confused within the crowd of opinions. Everybody has put their own view, now you have to choose the suitable one. debt consolidation has lots of benefits than the others you mentioned above. Have a look on the details of credit scoring model. It will help you understand why consolidation is least harsh to your credit.

http://www.debtconsolidationcare.com/forums/understand-fico.html

In debt settlement program, you end up paying partial amount of total debt, hence it is considered negatively by creditors and credit scoring model as well. Same is true for bankruptcy.

But, if you have certain amount in collection that does not add interest, settlement could be a good idea. Again it depends upon your situation. The ultimate thing is dealing with a good company that can guide you properly. Feel free to share your doubts here.