Has any ever used one of those debt consolidation places to try to control some of their debt? My FIL is in way over his head, and is looking into them, but we don't know who to trust. I thought I would see if anyone here has used them and has advice.

By Ginny~moderator on Thursday, August 19, 2004 - 06:30 am:

The only debt consolidation service that anyone should use is one connected with the national nonprofit debt consolidation organization - I'll try to find it. They do a lot of counseling before making any recommendations, and if they do help with debt consolidation charge very small fees.

Many of the debt consolidation entities that advertise are either profit-making or connected with a profit-making organization. Scott got hooked up with one of them and their fees were nearly one-third of his monthly payment. Some debt consolidation organizations have been sued by state Attorney Generals or in class action lawsuits because of their fraudulent actions. Be wary.

Here is what I posted several months ago:
Philadelphia Inquirer article by Jeff Gelles of Consumer Watch abaout "debt counseling" services, and here is the link. Note that this article is a couple of weeks old and the Inquirer may want a fee for you to view it - many newspaper sites do that for anything over 7 days old. http://www.realcities.com/mld/philly/business/personal_finance/debt_management/5589521.htm

It takes a while to load, but the gist of it is that if you want a legitimate non-profit debt counseling service, call the National Foundation for Credit Counseling, at 1-800-388-2227. Watch out for some of the newbies in this area of service - AmeriDebt is particularly not good, having been sued by the Illinois Attorney General among others, but those who are members of the Foundation are reliable, truly non-profit, and if they charge fees the fees are very,very small. And they don't charge fees for counseling, only if they actually set up a program where they intervene with your creditors for you and set up a payment program.
Here is a link to their webpage: http://www.nfcc.org/

Profina and Ameridebt are among the profit-making organizations that are not good to hook up with. Profina was the one that had Scott hooked.

By Karen~moderator on Thursday, August 19, 2004 - 07:28 am:

I have a close friend who went to Consumer Credit. They knocked over $30,000 off their debt in just over 2 years. They had MASSIVE credit card debt - I'm talking an amount that was equal to the price of my house when I first bought it. They were able to get interest rates drastically reduced and it prevented them from filing for bankruptcy.

By Happynerdmom on Thursday, August 19, 2004 - 09:21 am:

Just be aware that it DOES adversely affect your credit score if they make arrangements with your creditors. Some people don't realize the impact. My dh, who owns a mortgage business, does not recommend them at all.

By Jelygu on Saturday, August 21, 2004 - 12:21 am:

Thanks for the advice... I will pass it on to my FIL... Hopefully we can figure something out!