i’m trying to help a family member out with some credit card debt, but i’m not sure where to begin.
are credit counciling services (http://www.consolidatedcredit.org/) any good? do they just magically get your credit card companies to give you a better interest rate?
i’m not looking for a debt consolidation type place. she doesn’t have any equity to use as collatoral in a consolidation.
are there web sites devoted to explaining or “reviewing” such services, especially ones that don’t offer the services themselves?
any advice would be greatly appreciated.
Unless you’re credit is utter crap already, I wouldn’t recommend doing this. It will put your credit into the shitter.
Some of the services are actually nonprofit organizations entirely funded by major credit card issuers. Not that this makes them completely untrustworthy, in fact it may give them extra capability to cut a quick deal with some issuers. But it’s worth finding out & keeping in mind.
It may be possible to do some of this on your own too. Call the big lenders and explain the problem. Without some compromise on the part of lenders, some bills are going to go unpaid, and bankruptcy will have to be considered. Naturally, those who are quickest to cut or eliminate compounding interest will move to the top of the list to get paid back.
My understanding is that this is really what the counseling services do. But most charge a decent amount of money for it, considering the customer obviously doesn’t have money to spare.
I disagree with Dirt. But that should be part of what your family member negotiates for - “I will continue making some degree of payment on my debt with you, provided you agree to report no negative information to the credit agencies as long as I stick to what we work out right now.” Because if they’re going to report you as ‘late’ or something anyway, you might as well put all your payments toward other debts that you can keep in good standing. I understand this is also on the table and typically negotiated by the counseling services.
If the family member can actually figure out a lean budget on his own and figure out how much per month can go toward working off debt, and further present a “I’m getting my shit together” image to the lenders, I’d recommend trying all this directly. If not, and given that he’s already created some problems for himself, you have to consider this, I think a credit counselor is a good idea. I’d just shop around for a trustworthy & effective one (definitely check the BBB).
I’d stay the hell away from the credit card company funded ones just on conflict-of-interest grounds.