Russ Smith

Anybody heard of Donaldsonwilliams? I tried googling but hard to say what's true or not.

Long story short a friend of mine has too much debt and was advised to call them, they want $500 as a retainer to do credit consolidation. I've never done anything like that my intuition is to tell her to say no but she's unable to pay all her bills at the moment so she's looking for any help she can get.

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LVG

Never heard of them, but my own personal experience (may help you out some):

Went through credit consolidation about 10 years back. Was way over my head in CC bills and debts. Got a hold of a non-profit consolidation company. Was free on my end, didn't cost me a dime. They found out a lot about me (very detailed questionnaire), and then basically lowered my payments by about $1,000 a month.

In return, I had to pay off all debts within 3 years, couldn't use my existing credit cards, and couldn't get new ones. But 3 years later, I had no CC debt, and have kept it that way ever since.

http://www.consolidatedcredit.org/#

I do keep 1 CC for emergencies, but my rule is if I can't pay for it, tough crap, I can't get it. Either save for it, or forget about it.

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Gaddabout

I don't know them, but I think the retainer is an issue unless it's put into an account that the customer controls. That's how FreedomDebt.com does it, and those guys actually seem to be reputable.

A couple of things on this, though:

- Why pay someone to do something that you can do on your own? Anyone can negotiate with a creditor.

- If you have $10,000 in credit card debt and someone gets it reduced to $5,000, the IRS considers that $5K reduction personal income. I suppose you can get a letter from the company stating they won't report it to the IRS, but keep in mind not reporting it is illegal. Just FYI.

- If this person has lost a job, they automatically qualify for some form of bankruptcy, possibly even Ch. 7. That's a great negotiating tool. "Hi, I'm Mr. Soandso, and I'm a debtor to your company. I'm thinking about filing for bankruptcy tomorrow but I wanted to call you today to find out if there's some way we can negotiate a way to get you some money and we can part ways more amicably."

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conraddobler

I would strongly advise someone never to do that.

It's free from CCCS, consumer credit couseling service, but don't just google that, they're are bagillion imitators, I pm'd you a HUD certified couseling link for reverse mortgages, same entity though, that way you can be sure you're actually getting the non-profit version not a scam version.

They don't really consolidate it you just pay one payment to them and they divy it out to the creditors but to the consumer it's identical, just make sure they also know how to manage each creditor so that no creditor goes rouge and wrecks their credit.

Most of the so called cosolidation companies do this exactly the same way for a fee, CCCS gets it's fee from the lenders, it was started actually by lenders and has more clout IMO than other versions of this.

What I would do is manage CCCS myself and what I mean by that is a hyrbid of what Gad is saying along with the clout of CCCS.

Don't just let CCCS take care of everything there are tons of variables and they won't bother with all of them.

I would go to CCCS, then call each creditor myself, with a spreadsheet, mark down who you talked to, when and get whatever they agree to in writing if you possibly can.

Make sure that his credit is categorized properly, make sure the rate is really reduced, make sure that it's showing as included in a debt management program on the credit report and reports as up to date.

All that is key so the credit is not wrecked.

Debt management companies maybe are great at doing that part of it for you, anyone can negotiate lower rates and payements but that is by far not all of it, you also have to manage how damaging it is to your credit, there could be enormous differences in plans that look identical depending on how well they know the credit scoring system and how much they actually care.

I would check out CCCS, it's nationwide I think.

BTW you can combine this with your own negotiations, just work with the counselor, work for yourself, try for reduced balances, but always be aware of how it affects your credit.

Couple of things post starting a plan.

A. periodically pull their own credit to verify things are reporting properly, they'll want all three credit bureaus and a score for each.

B. https://www.annualcreditreport.com/cra/index.jsp link to a true free report once a year.

C. Stay involved and work the system, people can save a ton of money without wrecking their credit but it's a hobby and they have to watch the process.

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abomb

Dave Ramsey man.

thirty-two

:waiting for BIM:

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Ryanwb

he's married

Brian in Mesa

Dave Ramsey...basically common sense finances and getting yourself out of debt.

She doesn't need a CONsolidation company or to file for bankruptcy.

She needs a plan.

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Brian in Mesa

sorry, kate

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thirty-two

LMAO

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Russ Smith

So long time ago but against my advice(and most on this thread) the friend signed up with a company and started paying them $300 a month to consolidate her debt. She signed a contract and was advised to stop paying her credit card bills, they would negotiate settlements.

She's now being sued in Civil Court by 2 banks over credit card debt. I finally got her to see a lawyer and a financial counselor through EAP at her work, when this started she was unemployed so she didn't have access to EAP.

Long story short the financial guy said she's going to be paying the IRS in installments for her tax debt she'll have this year. And the lawyer drafted a letter to send to the credit company demanding they cease immediately withdrawing monthly from her account, she's changing the account # to block them from doing so, and she's probably going to end up suing them because to date they have not reduced any debt, and the attorney is hoping he can regain some of the money she paid them by way of breach of contract.

Don't use a company named New Path, in general don't use anybody who requires you to pay them upfront.

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“Your expectations always exceed outside expectations. I feel like you just can’t stop working, can’t stop getting better, because I’ll be a failure in my eyes before I’m a failure in someone else’s eyes.” -- Arron Afflalo

Jersey Girl

Wow, that sucks.

I would think it's best, in general, if you can, to handle these things on your own or with legal counsel.

Russ Smith

Well these companies actually make it much worse. She paid in about 3K to them, they say they will refund about $900, the rest is management fees and overhead. they never closed one debt, they were pooling the money until they had enough to negotiate.

She found out one bank that sued her refused to deal with the company when they sent her an offer to settle for about 2/3 of her debt to that bank. They also advised her not to settle another bank debt that was about 50%. now 6 months later that bank is suing her.

So instead of having some or all of that 3K available herself to pay off debts she has nothing, will get the 900 back they say(who knows).

She's very likely going to file BK, she might have anyways she made a lot of mistakes but the consolidation pushed it over the edge because when you stop paying at their direction, companies escalate the debt collection process.

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“Your expectations always exceed outside expectations. I feel like you just can’t stop working, can’t stop getting better, because I’ll be a failure in my eyes before I’m a failure in someone else’s eyes.” -- Arron Afflalo