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12 February 2005 @ 11:14 am
Been a year or so since I mentioned my credit card debt...  
...I guess that makes it high time.

So I'm in debt.  Far more than I ought to be.  But for the past many months, I've been making active efforts to not use any of my credit cards unless ABSOLUTELY necessary, which I've been finding really isn't all that often, and paying off more than minimum balances whenever I could.  All the same, At this rate, I won't be out of CC Hell until, like, 2011 or so.  (And this is ignoring the student loans I'm current getting, and the business loans I'll have to take out in order to open a practice in four years.)

I was telling all this to a friend, and he recommended Consumer Credit Counseling Services of OC.  A different friend had recommended them a couple of years ago, but at the time I was too dependent on the cards to even consider it - the first thing CCCS does is freeze your accounts so you can't accrue more debt.  But this time, it occurred to me that I'd already weaned myself off the cards for the most part.  So what's holding me back from getting some help, and possibly having someone negotiate the minimum payments and interest rates down on my behalf?

With that in mind,  I sent in my information yesterday.  They'll have a counseling person review and send me an e-mail in the next two business days with advice and possibly a plan.

*crosses fingers*
 
 
 
egheaumaen on February 13th, 2005 12:26 pm (UTC)
My Experience
I was in the same boat a few years ago. I was in the habit of paying off every other bill that came in, and I made my credit card bill the lowest priority (because that had always been Dad's advice), and so that bill had bloated to somewhere around the $15,000 range, with a ridiculous interest rate of 20% or something, which meant that every month they were adding another $300 or so of interest to the amount that I owed them. So if I was able to write a $1000 check to them for the month, only $700 of it would go to reducing the debt, and the rest of it went right into their pockets.

I was feeling depressed and helpless at the situation, but I got a sudden resolve that I had to do something about it. So I scheduled a meeting with one of those Consumer Credit Counseling Services. They examined all my finances, and the first thing they noticed was that my credit card bill was the only one that was outstanding. Well, that ended that. They sent me home immediately, saying they couldn't help me, because credit card companies have been suing companies like them for helping people out of that exact situation. If you're in debt to lots of different places, then they're free to jump in and consolidate everything into one place with no interest, and then they help you determine how much you can pay towards it each month and they help you figure out what expenses you can reduce (basically, luxuries you should give up) to make that monthly payment bigger. Since in my case, my entire debt was in one place already, I was a dangerous customer that they wanted nothing to do with.

But rather than leave that meeting despondent, I felt the opposite. I realized that the way out of this mess was actually pretty obvious. There was nothing this company could have done for me (which they were prepared to take a monetary percentage from as their fee) that I'm incapable of doing myself (for free).

I took matters into my own hands. I did some research on the internet and came up with a list of credit card companies that allow you to move your credit card debt over to them. In other words, they'll pay your entire bill off, and then you owe the money to them instead of to your current card. I was only interested in credit card companies that offered signup incentives of 0% interest for a set time, usually 6 months. And I made sure that these places didn't require you to sign anything agreeing to stay with them after that period of time ended. (That wasn't a problem. They know that clause would scare people away, and they count on clients to be lazy and inattentive, which I suppose most people probably are.)

I signed up for a new credit card, moved my entire debt over to it, and continued paying as large an amount into it as I could each month. Interest free. After six months passed and the startup deal ended, I moved the remainder of the debt onto another card offering the same 6 month deal. It was on that card that I was finally able to bring the debt down to zero.

Whether you do this yourself or you pay some company to do it for you, the methodology is the same. So you really may as well do it yourself and save that money. Just keep these two very important tips in mind: Make sure you read the fine print and be certain that the card you sign up for is commitment free, no strings attached. And pay attention to when the startup deal expires so you can jump ship at the appropriate time.

It's pretty easy when you think about it.
Idtechnomonkey on February 14th, 2005 05:25 pm (UTC)
True and not
It's a good strategy, except that my debt is roughly three times that amount, and it's spread across about ten credit cards - plus I have no income. Nobody's going to approve me for a card at all, much less for enough to close out even one of my cards.

I understand the strategy, and I'm jealous that it worked for you, but I don't think it'd work for me. At least, not at this point. =(
egheaumaen on February 14th, 2005 05:51 pm (UTC)
Re: True and not
Don't assume that. Look into it. I"m pretty sure they accept anybody. After all, people with crippling debts are far more attractive to them than people who pay off their full balance every month. They make a ton of money from that first group, and no money at all from the second.
egheaumaen on February 15th, 2005 04:12 am (UTC)
Re: True and not
I think they care more about credit history than no income. If you're capable of paying your minimum balance on time, and have a history of doing that, you should be okay.

Look here:
http://www.asapcreditcard.com/lowintroapr.html
Myrasilverlily81 on February 14th, 2005 05:20 pm (UTC)
The only problem I can see is that any time to get help with debt, it's a black mark on your credit rating. That's the boat I'm in, my debt is wasting away, but even though I'm personally making all the payments it still looks like they closed my accounts due to my negligence.
Idtechnomonkey on February 14th, 2005 05:22 pm (UTC)
Yuck.
I guess that's something I'll definitely need to discuss with the CCCS. Thanks for the heads up, and I'm sorry to hear it happened to you....


Other than that, how was your experience with the people you went with, and who are they? (if you don't mind my asking)
Myrasilverlily81 on February 14th, 2005 06:32 pm (UTC)
Re: Yuck.
I went through AFS (American Financial Solutions). They don't exactly consolidate your debt, they just negotiate for lower interest rates and take the whole payment from your checking account on the first of the month. Then they distribute the payments to each creditor. I liked the idea of the low rates, and I asked them if it would mar my credit like debt consolidation, they told me that it wouldn't. Then I discovered that although some of my interest rates went down, all of my creditors closed my accounts. I was already not using them, so that wasn't an issue, but now all of their records show that they "had" to close my account, even when I paid them in full.

Not the best thing that could have happened, but it was a learning experience.

I hope that it works out for you. It sounds like you're really in a place to do it now, weaning yourself off of the cards and all. Good luck.