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We are over 75,000 in debt and going through a hardship but have not made a late payment in over 10 years. We can do a hardship program with the credit card companies but are wondering if it will trash our credit or is it better than settlement and/or management. We understand our credit is going to be ruined one way or the other but we're wondering if we should try the hardship programs or go for debt settlement. The debt settlement companies seem really shady, though. Can anyone shed some light? Thank you!




IMO the effect would depend upon how the creditor would report the account to the CBs. Further if the lenders close the accounts then those would appear as negative entries in your report.

However, you can enter into the hardship program when you're current on the payments but settlement on the other hand may require the accounts being charged-off before the settlement process begins, which would cause more damages to your report as those would stay on it for seven years.

Anyway, you need to weigh all your options before entering into a scheme. It'd all depend upon the present status of the accounts, debt amount and the like.

Quote:
The debt settlement companies seem really shady, though. Can anyone shed some light?


Not always you need a settlement company to do the job. Check out the 'do it yourself section' of this site. May be you can handle the affairs yourself.

Sub: #1 posted on Thu, 08/20/2009 - 22:15

SC SC
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(Posts: 3937 | Credits: )

Definitely attempt a debt management program before things get out of hand. It does not affect your score because FICO doesn't take it into consideration. Its major affect is to make it tougher to get new credit, as your credit report is marked as being under a Credit Counseling program.

That said, be *very* careful. Even being one day late on a hardship program (be *early* with your payments) will cause them to drop you from the hardship program immediately, and they will likely raise your interest rates as high as possible - which will cause your payments to skyrocket and force you to default.

Sub: #2 posted on Thu, 08/20/2009 - 23:29

Chrys Henderson Chrys Henderson

(Posts: 2538 | Credits: )

I've looked at a few Debt programs, myself. A few of them (as you have put it, OP..) seem "shady." I would go with your 'gut feeling'............if you KNOW there is something wrong, I would back off..ya know? You may go MORE into to debt.

Sub: #3 posted on Fri, 08/21/2009 - 03:53

sdchargers_63 sdchargers_63

(Posts: 1798 | Credits: )

Agreed. I was speaking more if the OP had to make a decision *right now* and can't afford to go much longer with the status quo, which is how I understood the post.

Do It Yourself Debt Management page on DebtCC.
The FTC page: Knee Deep In Debt.

Sub: #4 posted on Fri, 08/21/2009 - 04:00

Chrys Henderson Chrys Henderson

(Posts: 2538 | Credits: )

The only negative mark when you go into a hardship program with a credit card company is that they credit close your account while in the program. This is so you arent able to continue using the account. ( I work for Macys Credit Dept) Im in a hardship program with one of my cards and although my account status changed on my credit report it had no effect on my score. I am in a situation kinda like yours.....Im just 22 but have over 20,000 in credit card debt. I've never been late on a payment but just needed to be able to send a lump payment to a company and LOWER the interest. I have a great company called clearpoint financial solution. Google them. Its GREAT! There fee is only 20 a month and my credit score went up from 650 to 678 and this is only my 5th month. Im on a 4 year plan so I will be debt free by the time I turn 25!!! Yae!!!!


Lastly, with any debt management company its just VERY important you take responsibilty and follow up on EVERYTHIING. Be sure you have all your due dates around the same time so your payments arent late. Until all the proposales are negotiated and you see the min pay change on your statement YOU ARE RESPONSIBLE for making sure the min payments are met. For the first month or two I double paid because the due dates were still being adjusted and my statements didnt reflect the new amouunts so to avoid any problems I paid more and before the due dates. The Debt management co does there part but YOU HAVE TO DO YOUR PART AND BE RESPONSIBLE FOR YOUR OWN CREDIT for it to work. Hope this helps.

Sub: #5 posted on Sat, 08/22/2009 - 09:04

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I've never been on a 'Hardship' program, with anything. However.........the advice that is being given seems pretty reasonable. (Thinking outloud here).. If you're trying to get OUT of debt, why WOULD you try and get 'MORE' credit? I know a few people who had to file BK. As soon as they filed, they starting applying for ALL kinds of things!! Doesn't that 'defeat the purpose' of BK!!??? I think this Forum can understand my point.

Sub: #6 posted on Sat, 08/22/2009 - 12:19

sdchargers_63 sdchargers_63

(Posts: 1798 | Credits: )

I certainly can. My mom did just that. She filed for $15k in debt in 2000 and had to file again in 2005 (2 weeks after the 5 year filing SOL) for $25k in debt (and that was after a year in a DM program). But at least she learned her lesson and has refused to get any more credit cards at all.

Sub: #7 posted on Sun, 08/23/2009 - 22:41

Chrys Henderson Chrys Henderson

(Posts: 2538 | Credits: )

Thanks for the understanding, CH. :D I'm sure your mom learned her lesson.I know someone whose BK has been 'discharged' for a while now. However.....during the 'middle' of the BK, she received all kinds of CC offers..she took just about evrey one of them!! NOW...she owes alot of money on these CC's. She was talking about filing for BK again. Gosh...it just doesn't make any sense to me. ..I feel like she did all of that 'effort' for nothing..ya know?

Sub: #8 posted on Mon, 08/24/2009 - 03:47

sdchargers_63 sdchargers_63

(Posts: 1798 | Credits: )

Exactly! She didn't learn the lesson the first time because she didn't believe me when I told her she would get all kinds of credit offers, so when they started coming in (and they were $2000, $2500, even $5000 a pop) she got so excited that she accepted the offers (admittedly, she didn't believe that they would *actually* send them to her). It's probably not that simple anymore, but as we know here, the creditors have as much to blame for the current credit crisis as consumers anxious to consume more (which message we are bombarded with via every medium).

Much of the motivation for the bankruptcy "reforms" was for just precisely that reason. Many people were filing every 5 years like clockwork, and that is quite fiscally irresponsible. However, I feel the "reforms" went way too far in the opposite direction.

Sub: #9 posted on Mon, 08/24/2009 - 04:10

Chrys Henderson Chrys Henderson

(Posts: 2538 | Credits: )

I am not sure what to do. I really am not in a lot of det but my income has droopd. I am thinking of just going to see a lawyer. I do not whant to file for bankrups. I really do not even trust those credit conceling companys because a lot of them are in law suits. Who do you trust these days?? I have a daughter going to collage at the end of the moth and i am strugling big time on making all of my payments. I am a signal mom with one income and no othere help. What would you do???

Sub: #10 posted on Thu, 08/12/2010 - 08:42

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