Expert: LJ Mangold - 12/16/2000

Question
Hello,

I've heard of debt consolidation but don't know much about it.  I am interested to know if this type of finance counseling will be a "bad mark" on my credit report or rating.  To my knowledge my credit history is great, but I am looking at consolidation for my current credit card debt.  Do you have any knowledge or suggestions?
Shane


Answer
Shane,
There are several non-profit companies that will help you consolidate your debt.
This can hurt your credit, if the company is shown on your credit report. Some creditors will make a note about credit counseling.
Lenders, for home loans, view this like a bankruptcy, but not quite as bad.
Most of these companies have a plan designed to be completed in 3 to 5 years. While you are in the plan, you can not buy a house, unless you payoff the plan. If you own a house, you can refinance but still have to payoff the plan, and your credit grade is lowered to a C or D and you can only borrow up to 75% LTV, at a high interest rate. It will take from 2 to 5 years, after paying off the plan, before you can get the rates offered to the best credit risk, an A+. People with past bankruptcies take from 3 to 7 years to accomplish the same.

Some of the companies are:
www.pueblo.gsa.gov
Free publications on Federal Consumer Information

www.debtorsanonymous.org

www.myvesta.org
Non-profit organization, formerly Debt Counselors of America

www.nfcc.org,
aka: CCCS
National Foundation for Consumer Credit (Comsumer Credit Counseling Services - CCCS) 800-388-2277

www.debtrelief.com
800-4debthelp

CCCS is the most used, but they are ones that will hurt your credit.
I have heard that www.debtrellief.com is one that is not reported on credit report, but I haven't verified it.


Not knowing what your credit is like, the best way to pay off credit cards is to pay the smallest ones off as fast as you can, then work on the larger ones. Some creditors will let you transfer debt to the card, anytime. Discover is one that is the best to transfer debt. See if you can get one, transfer part of your larger bills to it, pay if off as fast as possible, then transfer more debt, pay it off, and keep doing this until all the debt is manageable. DON'T CANCEL ANY CARDS, you can use them in an emergency. Keep the cards open, but cut up the cards. You will keep getting replacements, or the creditor will cancel the card for non-use, that's ok.

See if you can fix your credit without one of these companies or check on some of them, there is no obligation, but they do charge a small fee to sign up with them.

LJ Mangold
www.e-RealEstate-Loans.com

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