A good friend of mine is going through a divorce & is in debt, and says she has talked with a "debt reduction" specialist who says the plan would end up paying off your debts about 40-60 cents on the dollar over 2 years and would at the end have a solid "A" credit score.

Seems kinda too good to be true.. anybody go through something like this? Have any advice?

-Mel

sounds kinda like bankruptcy to me.... :confused:

Maybe what they do is say we will pay off your 24% debt now and you will pay us @ 10%, so she pays a fraction of real debt and they make money too. I guess it depends on the rates she is paying now verse the one she will be paying best of luck


Moose

I'm doing a bankruptcy right now because of my credit really sucking and lack of money. The lawyer was showing me stuff and how they are a scam. His credit will not show perfect, but instead will show that they were all defaulted. He will still have to work at getting his credit scores up..

Most of the "good" ones out there renegotiate interest rates in exchange for a "guaranteed" payment from that company (profina, CCCS etc etc etc). Then you pay them off faster because they actually pay more than the minimum payment at that point.

I just got a creduit report from one of the online free ones companies, and it had explanations of a buch of stuff. It said that any kind of debt counseling thing looks bad and even debt consolidation loans can look bad because they make it appear that you are in over your head

WATCH OUT!

Most of those companies are after one thing... YOUR MONEY!

Good information can be found on MSN MONEY here (http://moneycentral.msn.com/content/Savinganddebt/Managedebt/P36230.asp)

On the DIVORCE.... have the decree specify who is responsible for every credit card, acct#, and amount! I took the "joint acct" but my ex had a whole bunch of hidden accounts... thankfully my name was not on them, and they couldn't come after me after she defaulted on most. Whew what a mess.... My lawyer added one line to the decree that covered my but! :)

Tom :usa:

I did one back in college. Was in up to my neck with credit card debt and joined up with Metropolitan Financial Management. They are now called Auriton (because I still get mail from them.)

Like was said above, they re-negotiate your percentage rates on your debts. Somewhere in the neighborhood of 4% - 6% (except for Discover). You pay the Credit Counselor a lump sum once a month, which includes a small fee (~$10) for them, and they in turn pay all your debtors. It worked great at the time, because I was still very immature (my wife says I still am) and did not have the discipline necessary to pay off my debts.

However, hindsight being 20/20 I would not go through one of these programs again. For the primary reason, it destroyed my credit. These programs are only slightly better than declaring bankruptcy. Even after you have long since paid everything off, it lingers on your credit for years. Almost prevented me from purchasing a house.

I would recommend she (or a close family member or friend with a backbone) contact each of her creditors and re-negotiate her percentage rate. Tell them whatever it takes. It isn't easy, but it can be done. Plus you don't have to pay anyone $10 a month to do this for you. Then cut all her credit cards into tiny pieces and never touch them again. Also, go to a book store and cruise the financial section. There are several authors who have excellent plans on paying off debts and saving for the future.

I've lived for almost ten years without one and won't ever own one again.