Getting out of debt?
10-11-2005, 06:31 PM
#1
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Join Date: Sep 2002
Posts: 1,093
I see alot of ad's for getting out of debt. These companies say they can cut a deal with the creditor, work out a payment plan for free and get you on your way.
Whats all this about and does this really work?
Whats all this about and does this really work?
10-11-2005, 06:37 PM
#2
I would assume that it does work, they just tell the creditor, that if they don't reduce the debt, you will just declare bankrupcy. The creditor would rather see 60-80% or the loan repayed as opposed to nothing. The downside on this is it ruins your credit rating. Some financial institutions will loan you money, to consolidate all of your high interest accounts at a lower interest rate. The problem with this is you generally need fairly good credit, which most people in financial difficulty don't have.
10-12-2005, 08:29 AM
#3
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Originally posted by ShYYLO:
I see alot of ad's for getting out of debt. These companies say they can cut a deal with the creditor, work out a payment plan for free and get you on your way.
Whats all this about and does this really work?
I see alot of ad's for getting out of debt. These companies say they can cut a deal with the creditor, work out a payment plan for free and get you on your way.
Whats all this about and does this really work?
10-14-2005, 08:48 PM
#5
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Join Date: Oct 2003
Posts: 200
My uncle works for Primerica Financial and came over to help my wife and I out. It's a free consultation, and they'll go through all your debts and stack them in a logical order so you can pay them off faster. We've also got some RRSPs in the works soon. Anyways, most of the stuff is just common sense, but it's nice to see everything on paper so you can keep yourself on track and actually do it rather than cheat yourself.
10-15-2005, 07:56 AM
#6
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Posts: 274
When my wife and I did the Debt Consolidation, it was 4 years if u took 2 year to pay it off.. it was just double of what it took to pay it off.. We just did bankruptcy and was alot better and cheaper in the long run, through debt consol it was like 75$ month to them till it was paid off.. so it was like 3000$ paid out, or bankruptcy was 150$ month for 9 month then u get ur discharge.. Yes it messed up ur credit but what good is it, if u have stuff sitting there ripping it apart.. Now she has her discharge so if she wants we cn do a secured credit card and start building it back up.. So I mean techincally in a few years even though she's in bankruptcy she could essentially have perfect credit..
10-15-2005, 09:29 AM
#7
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Don't kid yourself, you won't have perfect credit anytime soon if you claim bankruptcy. My wife is a mortgage broker and she deals with it all the time, people think they have great credit after 5-6 years, but for major purchases it is still going to affect you. Sure you can get credit cards, and even vehicles in this day and age, but the banks are going to be a little tougher. Bankruptcy should only be the very last option...
10-15-2005, 10:02 AM
#8
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Join Date: Sep 2005
Posts: 274
^^Yeah ur still going to have issue, but that's why u work on **** during your bankruptcy.. Just like the Bankruptcy lady said "people use the excuse oh I went through bankruptcy, I can't get no credit" B.S u can get credit and if u keep up to date with it and being smart... You can get whatever u want after a few years, I know a few people who've went through it and after like 3-4 years they have new vehicles, a new house whatever it maybe cause they helped build it back up... Yes it's a last resort thing but either push it off so ur in ur 40 and brankrupt or do it young get it outta the way and start fresh.
10-15-2005, 10:48 AM
#9
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Alrighty folks here's the goods from the source. I am a personal banker for CIBC.
Options for clearing debt.
1) Pay it off. You accumulated the debt, so its your responsibility to pay it back. Even it it means selling alot of the crap you bought on credit to pay it off, bite the bullet and do it. Its better than killing your credit for 7 years.
2) Try to consolidate through a loan with your local bank. Some banks will require security for consol loans (generally using your home as security ie: second mtg). If it doesn't work out through your bank, try a finance company. Sure their rates are higher and you'll pay more interest, but its better than killing your credit for 7 years.
3) Borrow money from relatives. Ask mom, dad, that rich uncle, anyone. Chances are if your thinking about consolidating your debt's, its a pretty decent amount of money so borrowing from family/friends may not be an option. Swallowing your pride and asking for help from family is still better than killing your credit for 7 years.
4) If you absolutly can't pay it back and your credit is suffered already, you may be a candidate for a Consumer Credit Proposal. You need to sit with a Bankuptcy trustie to find if you qualify. They will review all your outstanding debts, find ot how much money you can afford to pay back with all your other obligations (food, rent/mtg, living expenses etc). Once they find out what you can budget, they now make a proposal to your creditors. You have to have at least 75% of those creditors accept your proposal. Typically your offering anywhere from .50-.75 cents on the dollar. So it is a significantly reduced amount. Most creditors will accept. But some are stubborn and won't. If less than 75% of creditors don't accept, you file for formal bankruptcy. Nice thing about a proposal is you don't have to forfit any of your assets. Meaning you get to keep your cars, furniture etc. Filing a proposal will result in a 7 rating on all the debt that is incorperated in your proposal. That rating will stay on your bureau for 7 years. You have to file proposal before bankruptcy or it can be taken to court and the court can throw it out and you loose the right to file Banko.
5) If a proposal doesn't fly, bankruptcy is your final option. You now get a 9 rating on your bureau for 7 years. You can't apply for any new credit until your discharged which takes usually 9 months but can be up to 2 years depending on your debtload. This is your final option. getting any credit after a banko is extremely hard, but can be done.
Just to clear things up about the credit bureau. the ratings go from 1-9. Once a debt is paid and closed, it will close at whatever rating it was last at. So if the credit was not paid in full, it will score a 7 or 9. Not good. Anything will stay there for 7 years. No exceptions.
Options for clearing debt.
1) Pay it off. You accumulated the debt, so its your responsibility to pay it back. Even it it means selling alot of the crap you bought on credit to pay it off, bite the bullet and do it. Its better than killing your credit for 7 years.
2) Try to consolidate through a loan with your local bank. Some banks will require security for consol loans (generally using your home as security ie: second mtg). If it doesn't work out through your bank, try a finance company. Sure their rates are higher and you'll pay more interest, but its better than killing your credit for 7 years.
3) Borrow money from relatives. Ask mom, dad, that rich uncle, anyone. Chances are if your thinking about consolidating your debt's, its a pretty decent amount of money so borrowing from family/friends may not be an option. Swallowing your pride and asking for help from family is still better than killing your credit for 7 years.
4) If you absolutly can't pay it back and your credit is suffered already, you may be a candidate for a Consumer Credit Proposal. You need to sit with a Bankuptcy trustie to find if you qualify. They will review all your outstanding debts, find ot how much money you can afford to pay back with all your other obligations (food, rent/mtg, living expenses etc). Once they find out what you can budget, they now make a proposal to your creditors. You have to have at least 75% of those creditors accept your proposal. Typically your offering anywhere from .50-.75 cents on the dollar. So it is a significantly reduced amount. Most creditors will accept. But some are stubborn and won't. If less than 75% of creditors don't accept, you file for formal bankruptcy. Nice thing about a proposal is you don't have to forfit any of your assets. Meaning you get to keep your cars, furniture etc. Filing a proposal will result in a 7 rating on all the debt that is incorperated in your proposal. That rating will stay on your bureau for 7 years. You have to file proposal before bankruptcy or it can be taken to court and the court can throw it out and you loose the right to file Banko.
5) If a proposal doesn't fly, bankruptcy is your final option. You now get a 9 rating on your bureau for 7 years. You can't apply for any new credit until your discharged which takes usually 9 months but can be up to 2 years depending on your debtload. This is your final option. getting any credit after a banko is extremely hard, but can be done.
Just to clear things up about the credit bureau. the ratings go from 1-9. Once a debt is paid and closed, it will close at whatever rating it was last at. So if the credit was not paid in full, it will score a 7 or 9. Not good. Anything will stay there for 7 years. No exceptions.
