debt management credit counseling corp
Debt management – do these companies hurt your credit?
I’ve got about $63,000 worth of debt between 1 credit card, a car loan and school loans (mostly school loans) and am struggling to pay the credit card. mostly, because at 15.9% and paying the minimum, it’s not going down. I’ve been told that debt consolidation is not the way to go and to check out debt management. My questions:
- If you go through a debt management company, does this impact your credit score?
- Debt Counseling Corp. claims to be free but I’m skeptical. Are there hidden fees with these places? They say they’re non-profit.
- I don’t want to pay for seminars, books, Website access etc. like Dave Ramsey’s site only to find out I’ve thrown more money away and am no closer to being debt free then I was before shelling out the cash.
- Has anyone undergone or is currently using debt management (lowered APR’s) and can recommend a reputable company? I know many aren’t legit.
This is my first step in figuring it all out – research. Any help would be great.
I don’t know about this company, but be careful.
Credit repair companies charge large fees, which, if put toward debt repayment would improve your situation. Some firms can make your problems worse.
The three main tactics that they use are:
(1) sending letters to initiate disputes about errors on your report. You can do this for free.
(2) sending letters to initiate disputes about things that are derogatory, but are not errors. Some creditors will not verify the debt and this gets deleted. Good. Now the bad news. You can get tagged as initiating frivolous disputes, impairing your ability to fight real errors in the future. You can end up unable to borrow because you won’t have a credit score. A lender who requests a score will get a message back “Unable to process – too many lines in dispute”. Try and borrow with no score.
(3) They have you route your money for bill payment through them. No creditor will negotiate if you are current, so the creditors stop paying on your good bills so they go into default and then negotiates a settlement at less than face value. This saves you a few dollars now, but makes you look like a chronic deadbeat to all lenders in the future.
