Can the credit card “help” companies really lower your overall payments and is it worth it?

tophel: Can the credit card “help” companies really lower your overall payments and is it worth it?
Credit card debt-we got into it a bit and these companies that advertise that they can get your interest lowered look really good, but what is the real deal and are they effective–without going on you credit report?

Answers and Views:

Answer by knowitall
No, they just cost you money and many do nothing, but in any case you can do the same thing yourself. Only a member of NFCC is legit.

Answer by Dennis
They can lower your payments, but at a big cost to you. Normally they do charge a fee, and their methods tho effective will destroy your credit. It works like this. The tell you to not pay the CC bills when they come due. After a while the creditors start to call. You are instructed to give them the phone number of the credit consolidation service. When your bills are so far over due, the CC counseling company contacts the CC company and offers to settle the debt you have for a lesser amount. The CC company now thinks you will never pay, and agrees to take a lesser amount to settle the debt. Some credit card companies like American Express won’t do this, and will sell your debt to collections pronto. your credit report will reflect late and non payment. It will also show a charge off for the amount you haven’t payed. In addition the charge off amount is reported to the IRS as income, and you get to pay taxes on it. So yes it will go on your credit report and destroy your credit for 7 years. The CC consolidation companies do not stress this.

Contact the creditor and negotiate with them to lower your payments to something you can afford. Stop using the cards. I wish someone would have given me this advice!

Answer by StephenWeinstein
No. You cannot get your rates lowered if you use those companies. However, you may be able to get your rates lowered if you do not use those companies. They are not merely ineffective; they actually make things much worse.

Answer by Age of Reason
They are doing what you could do yourself for free. Negotiate. Call the credit card companies and offer to pay 50% of your debt in cash within the week
Or Ask them to freeze the interest, close the account and accept 100 a month
That is what the companies do and charge you a percentage of your debt.
Whether you pay someone or do it yourself damage is done to your credit. Failure to promptly pay any bill in full is a negative on your report

Answer by CatDad
Consumer Credit Counseling Services (CCCS) can negotiate reduced interest and payments (but not settlements for less). You can get a referral at: https://www.nfcc.org

Stay away from any “debt consolidation” company that promises to cut your payments and debt in half through debt settlement….This is a risky tactic of deliberately ceasing all payments to creditors and forcing your accounts into default to attempt settlements. You can never predict how your creditors will respond to the deliberate defaulting of your accounts…they might settle at 50%…or they might serve you a summons, take you to court.

Answer by bdancer222
If you are having problems keeping up with your credit cards, contact a NFCC credit counseling company: https://www.nfcc.org/. These are legit, non-profit companies that offer debt management programs for a nominal fee. The negotiate lower interest and payments so that you can pay off the debt.

While in the program, it is noted on your credit, but that notation is removed when you complete the program and you will have decent credit.

Answer by iffley
I am not affiliated with Dave Ramsey, but he is a wealth of financial information. His books, radio show, website (www.daveramsey.com), etc.

Regarding the question, from what I have read, seen, heard about from friends, a lot of these credit card help companies advise you to stop paying the cards so you ultimately default, get way behind and then try to negotiate a “pennies on the dollar” settlement. The problem with this is that it’s risky, ruins your credit and doesn’t always work. There have been many in the news in the past few years that allowed the customer to pay them, they in turn paid the credit card companies. At least they were supposed to, many got caught not paying up and their customers lost all the money paid into them. Not all companies are bad, but a lot are so be careful.

Check out Dave, he gives good, solid advice on beating debt and building wealth. He helped me a bunch!

Answer by capitman
Once the credit card companies are contacted by the company and asked to reduce debt, they will report you for defaulting on your debt. The debt maybe reduced, but your credit report is shot.

Debt consolidation isn’t much better – you lose it even more, one bigger payment.

The better idea – lay out your debts small to large – pay mins on everything bu the smallest and work like crazy to pay that one off, then the next lowest and so on.