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Question: Help! debt settlement?

(Posted by: Heather Marie on 2008-11-20 05:52:53)

Hi, just a few questions to anyone who knows anything about debt settlement. Please answer seriously. Thanks in advance!!!! My husband and I racked up a lot of credit card debt. I would say around $30, 000 to $40, 000. It got to the point where we couldn't make our minimum payments. What can I say? We were pretty stupid! Anyways, we started with Care One Debt Consolidation. They wanted a payment of $800/ month. This was a lot for us (on top of our other bills - car payments, insurance, etc.) but not too bad because we were not married yet and still living at home with my mom (I just turned 20 by the way.) In March of this year, we got married and I got a better job so that we could afford to move out - just barely afford to move out. Now, with rent and electricity and everything else, we can't make the huge $800 payment for the debt consolidation. My husband (he is 26) just got his hours cut back due to the winter and the struggling economy. We missed last months payment and called Care One back to see what we could do. They recommended Persels and Associates, LLC to us (supposedly through Care One as well.) They took down our salaries and then subtracted everything that we have to pay every month. Turns out that we can pay $240 a month now. They said that this goes into an escrow account and they negotiate with the creditors to settle. They said that this will take 4 years. Before, I was paying the $800 per month and they said that would also take four years.... So I guess if my math is correct, then I will be paying out $11, 520 with Percel and Associates as oppossed to $38, 400 with the debt consolidation plan. I know it will effect my husbands credit, but how bad? Is this the same as bankruptcy? I know that they take fees out of your money....that is okay with me as long as it all works out in the end. We can't make the payments now, so I guess it's no different???? Anyone heard of this Persels and Associates, LLC? I heard that you can get sued by the credit card companies.....is this true? Anything else you can tell me? I need some much needed advice. Credit is a big deal I know, but my husband is still young - we are not planning on buying a house anytime soon or getting any more credit cards with large balances. We now have $560 extra dollars per month that we can put towards savings, paying down our cars, etc. What are your thoughts? Thank you so much for listening. I am so confused and need some major insight.

Posted by: Sgt Big Red on 2008-11-20, 06:23:19

These type of companies will in the long run cost you more then you know. As to Persels and Associates LLC, they are just a subsidiary of Care One Credit. They make you pay funds into an escrow account first (minus their monthly fees) then inform your creditors that they would like to offer a settlement. They however wait forever to do so, once the creditor has waited long enough, they may take the offer. But remember this, no creditor is obligated to accepting their offer and could wait a few years and just before your state statutes of limitations runs out for bringing a civil suit to seek a judgment expires, they will hit you with a law suit. Ask them to provide you with a monthly statement to see where you stand with your creditors. As to your credit rating, well all of your credit reports have now been flagged as being in settlement which will affect your score in a very negative manner. You might want to read about them from a person who filed a complaint at this following web site: ripoffreport.com/ reports/ 0/ 354/ RipOff0354186.htm (NOTE: this web site might take a while to download) Here are some "warning signs " to look for The company wants you to pay for credit repair services before they provide any services. Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the services they have promised. The company doesn’t tell you your rights and what you can do for yourself for free. The company recommends that you do not contact any of the three major national credit reporting companies directly. The company tells you they can get rid of most or all the negative credit information in your credit report, even if that information is accurate and current. The company suggests that you try to invent a “new� credit identity — and then, a new credit report — by applying for an Employer Identification Number to use instead of your Social Security number. The company advises you to dispute all the information in your credit report, regardless of its accuracy or timeliness. Other then this, I can not personaly state that they are not legitimate, but one should allways be wary. Remember, if it sounds to good to be true, then it isn't. EDIT: NOT all links provided are SPAM, only those that lead to pay for services web site. Hope this answer is of help to you LEGAL DISCLAIMER: The answer provided here is intended for informational purposes only. It is not intended nor presumed to be legal counsel or professional legal advice

Posted by: Helen, EA in PA on 2008-11-20, 05:58:27

Any foregiven debt will be taxable income to you, and that appears as it what will happen in 4 years. I have not heard of any of the companies you have stated, but please, try to work on NOT using credit. You are WAY too young to have that much debt. Helen, EA in PA

Posted by: iceberge on 2008-11-20, 06:13:48

Hi Your case seems to be abit complicated to understand with issues such as numerous debts, creditor charges etc etc. First and foremost I am quite stunned that you are in such huge debts at a very young age. Age 20 yrs is a career & foundation start age. OK. debts have been incurred. Its time to reduce the debt and ofcourse not to get anymore debts until you have sorted out. CREDIT CARDS ARE NEVER TO BE USED. SPEND WHAT YOU HAVE AND NOT WHAT YOU DONT HAVE. My advice with this is try to generate more revenue and reduce down all your expenses. This will enabke you to meet your liabilities. Be prompt with your loan instalments as any default might get you sued. Good luck

Posted by: Christin K on 2008-11-20, 06:31:55

First, you should never have sought a company like Care One to do a debt payback--when a company asks for money up front like they did, they are BREAKING THE LAW. It is illegal. But you did, and you're sort of stuck with it now. I would suggest you do some research on your credit rights and responsibilities. There are a lot of websites out there who will give you this information for free. There are also many non-profit organizations who will do everything that Care One does---FOR FREE. Yes, a credit card company can sue you. They can garnish your wages, they can make your life miserable. They can confiscate your assets. You owe them money, per the contract you signed with them when you obtained their credit card. And every purchase you made on those cards is also a contract to pay. Persels and Associates LLC is a law firm. I don't know that they are better or worse than any other law firm. They are probably going to take a huge chunk for a fee out of your situation--either from you and your husband or Care One. You need to know your rights under the Fair Credit reporting act, and the Federal Trade Commission. Care One did nothing you could not have done for free. Is it bankruptcy? No. But it's LIKE a Chapter 13 bankruptcy--they negotiate with your creditors for what the credit card companies will accept as payment, then they get you to pay them a lump sum every month and distribute it among the card companies as they have agreed. You may have a couple of alternatives. Chapter 13 bankruptcy is one of them. Your credit rating will only suffer for a little while--about 7 years during and after you file. That's not forever, and it's not even permanent--even before that 7 years are up, you will be able to get credit. You will pay higher interest rates, and maybe have to use a co-signer, but you'll be able to. Chapter 7 bankruptcy will wipe out all your debt. It's the same recovery time. If you are interested in a fresh start, a complete clean slate, that's the way to go. Again, your credit will be hurt, but it's not a permanent hurt. You have plenty of time to recover from this, if you act smartly instead of desperately. (1) NEVER sign anything you don't fully understand and that has asked for money before services are rendered--when it comes to credit, EVERYONE is a scammer. READ everything you sign. and if you don't understand it, ask that it be explained to you in plain english, write down what they tell you, make them initial or sign what you wrote, and keep it with your records. (2) Get the name--first and last--and title of everyone you speak to on the phone. NEVER trust that they will do what they say they will. ALWAYS get everything in writing. (3) Don't sign up with the first debt relief firm you contact. Shop around for better deals. (4) No debt relief organziation is allowed to ask you for MONEY UP FRONT. That is illegal. You can get these services for cheap, or free if you search. Consumer Credit Counseling is a not-for-profit agency that does what the debt relief people do, and they do it for nothing. (5) Credit is not that big a deal. You don't have to stress over it. companies cannot get money you don't have, or wages you aren't earning. Plenty of millionaires had such ups and downs during their lifetimes--you can recover from any credit crisis with enough time. Good luck to you.

Posted by: Gun Toting Survivalist on 2008-11-20, 06:36:33

I just told my husband that someone on here had $30,000 in debt at the age of 20 and he choked on his cereal. Don't pay attention to anyone who post links to other web site, it's spam. If your having trouble even making your minimum payments, then it's time for both of you to get second jobs and cut up ALL of your credit cards. You never going to get out of this mess if you keep relying on credit.

Posted by: JB on 2008-11-20, 07:00:35

Your credit is already trashed so don't put much thought into that. It'll be trash even after you come out of this debt consolidation. Bankruptcy is the atom bomb to credit. Debt consolidation is not as destructive but still wacks it. So forget about your fico score. I strongly urge you to use some of that 560 dollars to build an emergency fund. Start out with 1000 dollars. That alone will bring some piece of mind. You mentioned you don't intend to get anymore credit cards with large balances. I strongly urge you to amend that statement to say no more credit cards ever. Once you have the emergency fund then start throwing it at debt. The quicker you get out of debt the sooner you can get your life back and start planning for future. Do not use the extra money to build lifestyle. That's what got you into this mess, I bet. You can build lifestyle once your out of debt.

Posted by: Chris C on 2008-11-20, 09:31:36

I am absolutely baffled at some of the replies on here, like telling you that you're never going to get out of this and that credit cards should never be used ever, to start an emergency fund first then pay off debt and that another Great Depression is coming....BRUTAL! First off: Debt Settlement is a huge black mark on your credit report. The only thing worse is bankruptcy. Try all other options first. Just becuase you don't plan on buying a house in the near future, doesn't mean this won't affect you. What if you car breaks down and you need to buy a new one? What if you get kicked out of mom's house? What happens if an emergency comes up and you need some money quick? You don't have credit cards anymore or the ability to take out a loan to cover any of that....and you likely have to wait more than 7 years before you can get any of that stuff. A lot can change and I know some of my firends that thought bankruptcy was the easy way out and now they are suffering. Just becuase it doesn't show up on your credit report, doesn't mean that it completely disappears. I would try all that you can make as large of payments as possible. What are your payments right now? At least the consolidation should lower your interest rate to prevent you from going even further in the hole. Try to find second jobs. If you're BF got his hours cut, then find a part time job to replace those hours. Free up as much cashflow as you can buy cutting out all unnessessary expenses, then take the smallest debt and start applying all the extra money you have to that one. When it's paid off, take that extra money and payment and apply it to the next. Just keep moving the entire payments on to the next debt. It's called a debt snowball that is promoted by most good debt management companies. If Parcell's is owned by Care One, you need to find some third party independent andvice. They are just looking to profit from you in one way or another. Gauranteed, if you don't go for the settlement, they'll pass you on to a bankruptcy compnay they also own. They want to keep the money within the company. Find an independent credit counciling service that is not for profit. If you are your BF have group benefits at work (or if you are covered under your parents benefits since you're still living at home), check if you have an Employee Assistance Program (EAP). EAP is a service that many employers are including in their group benefits. It's an 800 counciling hotline for hundreds of things like crisis management, emergency medical advice, stress management, personal family issues and yes, debt management/ credit crisis issues and other financial problems. They'll hook you up with a free counciller that isn't trying to sell you anything, just provide you with advice, then with that advice you go out and find what you need....if they recommend you look at a consolidation loan, it's up to you to find one, etc.