| How debt negotiators can crush your
credit |
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"This firm and its ads preyed on consumers, who
paid thousands of dollars to rid themselves of crushing debt,"
says California Attorney General Bill Lockyer. "Instead, Briggs
& Baker left its customers with more debt, ruined credit histories
and sometimes no choice but to file for bankruptcy."
People with just a few thousand dollars of debt would do well to
steer clear of debt negotiators altogether. A debt-management program
may be a better option.
When you enroll in a debt-management program, you write a monthly
check to the credit-counseling agency and the agency pays your creditors.
In a typical debt-management program, a card issuer will charge
lower interest rates, stop charging late fees and contribute money
to the debt-counseling agency. A debt-management plan usually lasts
three to four years.
A visit to a reputable credit-counseling agency may help you determine
if a debt-management plan might be right for you.
Be sure to choose your counseling help carefully. There are some
pretty shady operators running so-called counseling agencies these
days. For tips on finding the right kind of credit counseling help,
check
out this article from Bankrate.com.
Do-it-yourself debt help
There are plenty of things you can do to get a handle on your debts
all on your own. These pay-down
strategies from Bankrate.com are a great place to start.
And you may be able to get lower interest rates on your credit
card accounts by picking up the phone, calling your creditors and
asking.
You don't need perfect credit to get a rate reduction from your
card company but you do need to ask. Not sure what to say? This
Bankrate.com
article is full of tips.
You may be able to negotiate a lower payoff amount from a credit
card company on your own as well. You'll never know if you don't
call and ask.
"Most creditors are willing to work with consumers,"
says Edward J. Johnson III, president of the Better Business Bureau
in Washington, D.C. "Their interest is in getting the money
back."
So give your creditors a call and ask for a lower payoff amount.
Richard has worked with consumers who were able to settle card
accounts by paying 60 percent of the balance. All they did was call
and ask.
"They can do this themselves. The creditors are willing,"
Richard says. "You don't need to hire someone and pay a lot
of fees."
But you do need to have plenty of cash available to make a settlement
offer. If you don't have the cash, try asking for a break on your
monthly payment amount or a lower interest rate.
If you're still game to try a debt-negotiation program, be sure
to choose the company carefully.
Contact the Better Business Bureau to see if the firm has had any
consumer complaints. Check with your
state attorney general's office or other state consumer agencies
to find out if there are any pending legal investigations.
"Look into these places," says Deanne Loonin, staff attorney
with the National Consumer Law Center in Boston. "What are
they doing for you first of all? What kind of track record do they
have?"
What kind of fees do they charge? Are there upfront fees? How much
do they charge for negotiating a lower payoff amount with a creditor?
Don't forget to check for debt negotiation programs run by credit-counseling
agencies. These programs tend to charge lower fees.
Be sure to run a background check on a credit-counseling agency
before your first visit. Not every nonprofit counseling agency has
your best interest at heart.
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