Has anyone here used any of those Credit Card Assistance Agencies?

[Vraille Darkfang]

My mom is really starting to get nervous.

She's got a good deal of credit card debt and its really starting to pinch her.

Plus, she's Diabetic & her free income is now in the negative.

And the Credit Card Companies Bully her, raise her rates, & just generally take advantage of her.

I know there are a lot of resources to help people in her situation, but so far the main things she has gotten in the mail is of the "Just send us money... Then we'll fix it. Trust us."

Does anyone here know which are the valid organizations that help people in her situation?

(or where to go to find said organizations).

I'm too far away too really help.

Thanks,

 

[sedarfairy]

I'd check with the Better Business Bureau for the best option. My mother is currently working with a credit counseling company. So far they are doing okay with her. They have stopped the calls. Legally, they have to send her a statement each month. This company is the go between and you have to sign a power of attorney. They charge a fee, payable by installments, negotiate the debt, and then you build up the rest through monthly payments to an account. The best companies leave that account in your name and have to call each month to get permission for the automatic withdrawal. When you have enough built up, they will tell you to send in a check for the settlement, then you start on the next card. It does adversely affect your credit for the time being, but when you make the big payoff, usually in about 36 months, you are better off. Mom retained a small credit card to keep for emergencies and put her other two in the program. However, if you need anything big that requires a credit check, i'd buy it first, then start the program.

 

[Pbartender]

My mom is really starting to get nervous.

She's got a good deal of credit card debt and its really starting to pinch her.

Plus, she's Diabetic & her free income is now in the negative.

And the Credit Card Companies Bully her, raise her rates, & just generally take advantage of her.

I know there are a lot of resources to help people in her situation, but so far the main things she has gotten in the mail is of the "Just send us money... Then we'll fix it. Trust us."

A year ago, my wife was in the same position. Here's the deal:

Almost every single one of those bits in the mail you get about credit card help are barely legal scams. Don't. Trust. Any. Of them.

Be aware that most of the legitimate credit help people won't give you help unless your total credit balance is $10,000 or more.

if you do decide to use one, do as Sedarfairy suggested and do your homework thoroughly before committing.

In my very personal experience, you'll have much better luck talking to the credit card companies themselves... She should them she's having trouble making the payments and needs help. Often you can get the credit card company to drastically reduce the interest rate and suspend any late fees and over-limit fees. Once that's done, make sure she cuts up her credit cards (but don't cancel them -- leave them open and paid off to help rebuild her credit score and for necessary credit checks), and then come with a plan to pay them off...

First, get them all under the credit limit of any are over. Then, pay at least the minimum on all of them, but have her sink all her spare money into which ever card has the highest interest rate. Once that one's paid off, do the same with the next highest, until they're all paid off. Then, take all that extra money that's not being used any more to pay off credit cards and stick it in the bank... If you've got a couple grand stashed away in the bank, you don't really need to use a credit card.

Another option is to talk to your bank... You may be able to take out a personal loan with a lower interest rate than what she's paying the credit cards. Use the bank loan to pay off the credit cards all at once, and then you've just got the one payment to make to your bank.

 

[wingsandsword]

They changed the bankruptcy laws a couple of years ago to make it harder to declare bankruptcy, especially for credit card debt (the Credit Card companies bought that law outright, they were losing a lot of money on giving credit cards to people who couldn't pay then had the debts discharged in bankruptcy, so they lobbied to change the law). I'm not a lawyer, but I'm pretty sure now you actually have to have used a credit counselor to declare bankruptcy, so talking to a lawyer who does bankruptcies could probably help you find a legitimate counselor.

If you can get a loan at a lower interest rate than the credit cards to pay off the cards then that's good. Also, if you've got any equity in a home, this could be a very good time to tap it.

 

[ssampier]

Excellent advice Pbartender. I know it took me years to pay my credit card off, but I finally did. Now I can build some decent savings (and pay more on my student loans ).

To the OP, great that you are concerned about your mom. Do you know how much she does pay on the credit cards (minimum 2% or 4%)?

 

[Byrons_Ghost]

Most states should have some sort of consumer bureau that, even if it doesn't provide counselling services itself, should at least be able to give a list of reputable services. Department names, contacts, etc will vary from state.

You might also want to check around with friends, on the boards, etc and find someone who works in the credit industry. There's a lot of extremely dodgy practices that happen, especially with repayments. I know a few people who work in collections, and I'd take their advice way before any kind of counselling agency.

 

[Harmon]

Hay V,

Sorry to hear your mom is having credit card issues.

First off, suggest that she call them and tell them she's having issues with fixed income and paying her bills. Have her ask them to work with her by either lowering the interest rate or freezing the account (can they still do that- I wonder). Freezing the account locks in how much she owes them, but she can't use the account and she has to pay them on time every month.

Taking a second out on her home (if she's not renting) could save her now but doom her later (the situation I am in), but at least she's not paying 20-35% on the cards just 8-12% on the house. It will give her breathing room and allow her time to figure out what to do next.

Suggest that she start selling stuff. If the creditors come after her they might get everything, but if a judge (should it go that far) see that she's sold off everything she can then he might just tell the credit card companies to bugger off.

No matter what cut those cards up, shred the little pieces, then melt those shreddings with a blow torch.

Good luck.

 

[Bront]

I used Springboard for credit counciling. It helped, cut down my interest by quite a bit, and I was able to pay everything off eventualy.

You just have to make sure you keep on top of the balances of the actual creditors, as they don't keep track of interest in your statements.

Bankruptsy can wipe it out, but it will stain your credit for longer. Credit Counciling does hurt your credit for a bit while you are on it, but idealy you aren't doing anything with your credit over that time beyond a major purchase, and even then you should be careful.

 

[Pbartender]

Have her ask them to work with her by either lowering the interest rate or freezing the account (can they still do that- I wonder). Freezing the account locks in how much she owes them, but she can't use the account and she has to pay them on time every month.

Yes, they can... Often, they'll require you to set up an automatic monthly transfer from your checking account to ensure that the minimum payment get paid on time.

Taking a second out on her home (if she's not renting) could save her now but doom her later (the situation I am in), but at least she's not paying 20-35% on the cards just 8-12% on the house.

That depends on the ratio of her credit debt to her home debt... 20-35% on $10,000 of credit card debt that can get paid off in a year or two of careful budgeting is a lot better than 8-12% on 100,000 of mortgage over the next 20 years -- Even over the course of one year, it's the difference between $2,000-3,000 of interest and $8,000-12,000 of interest.

Stick with the credits cards, buckle down and pay them off.

 

[Vraille Darkfang]

Thanks for the advice.

My mom doesn't own a house & has no real assests to speak of.

While Bankruptcy would here her credit rating, it wouldn't a whole lot worse than it is right now.

The main problem is I'm too far away (and lacking in free time) to do the research for her.

She lacks internet access & isn't sure where to go for help. She lives in the same town as my sister, but she has a kid that just turned 2, so her free time is limited.

I'll see if maybe MO (specifically ST Joe) has some sort of Consumer Bureau that would give her the info she needs.

Her job is OK (she has medical benefits). But her debt load, combined with her medical problems (diabetes), she just barely has more coming in than going out.

Any month with unexpected expenses around $100 bucks or so & she gets in deeper.

Rarely is a month where she ends up better than the previous one.

Until she gets the Debts she has under control, there isn't a lot I can do to help here.

I could send her cash now & then, but it won't be enough to make a long term difference.

She's taked some steps, but to be honest.

She took a long time digging herself in, so it's going to take a long time digging herself out.

Biggest source of debt. Store Credit Cards. The ones with the 25% Interest & low monthly payments. That's what really got her.