Saturday, December 19th, 2009
What should I know about credit consolidation?
lovelydragonprincess asked:
I was out of work for a while, and I fell behind on my credit card payments. I’ll never be able to make the minimum now, and I’ve got to do something because the rates will keep going up and they’re going to continue to bug me all day about it. I don’t want to declare bankruptcy, so I thought about doing credit consolidation. I want to know the consequences of doing this though, so I just wanted to make sure it’s really the right thing to do. Any feedback about credit consolidation is appreciated!
I was out of work for a while, and I fell behind on my credit card payments. I’ll never be able to make the minimum now, and I’ve got to do something because the rates will keep going up and they’re going to continue to bug me all day about it. I don’t want to declare bankruptcy, so I thought about doing credit consolidation. I want to know the consequences of doing this though, so I just wanted to make sure it’s really the right thing to do. Any feedback about credit consolidation is appreciated!
December 21st, 2009 at 5:01 pm
There is nothing a credit consolidation company can do that you can’t do yourself.
They just charge you several thousand bucks for a false hope.
And, should you apply for a mortgage, there’s no difference (in the lender’s eyes) between a debt consolidation plan and a Chapter 13 bankruptcy.
Here’s what I did when I was out of work and fell behind:
Organize my finances.
If I have to choose between ____ and _____, which one do I spend money on?
Here’s my list, in order of importance:
Food, shelter, clothes, transportation, utility bills.
The credit cards do not get a dime until I get back to work.
Sure they can scream and complain, but that’s all they can do.
And cut the budget. I had my food budget down to $11 a week. Sure I was eating canned beans and plain rice, but I survived it.
After I got back to work:
Closed down ALL my credit cards, and negotiated repayment plans.
If you haven’t paid them in 3-6 months, they’ll be willing to listen.
If I stick to it, my $36,000 in debts will be paid off (in full) in about three years.
It’s not pretty, but it beats bankruptcy. And, there’s the whole moral thing. I did borrow the money. I do owe it. I just couldn’t get blood out of a turnip when I didn’t have any money.
Is my credit shot? Yeah, right now. But it’ll recover. I’m living on cash these days and saving for nice stuff.