Does anyone have any information about debt consolidation companies?
A friend of mine is fed-up with debt. However she signed up for help from one of the non-profit debt consolidation companies. I don't know anything about them. The company is called Careone. Does this company have a very good reputation or is it like the other debt consolidation companies.
CareOne does both non profit debt management and debt settlement. These are completely different programs: The non profit debt management plan is safe....the debt settlement plan is risky. If your friend is in their debt settlement plan, then she needs to be aware that this program involves deliberately defaulting on her cards to settle for less....These programs have you go into complete default on your cards so that they can settle the debt down the road for less...like 50% or so. Creditors have no obligation to take any settlement and their response to the deliberate defaulting of the accounts might be to serve her a summons and take her to court. This could lead to wage garnishment. Bottom line: If she's in their debt management plan where her creditors are being paid every month...she's okay. If she's in their settlement program where her cards are going to go into default, then she's taking a big risk.
It's out of business now, I believe, and I don't even remember the name. Ameri-something. I had to pay them a lump sum every month and they were supposed to pay my credit cards with the money and get my interest rate reduced. Instead they paid late or not at all, I got massive late fees, and the interest rates were unchanged. I called my credit card company which told me these places have no authority to promise reduced interest rates and in fact they had never even contacted any of my creditors on my behalf! After about six months I refinanced my mortgage and paid the cards off that way. I found this good article online that explains how it all isn't as good as it seems: before you start skipping down some financial yellow brick road to see the Wizard of Debt Consolidation, remember this: Watch out for those flying monkeys. Three bad debt-consolidation moves: 1) The Hard-Money Loan 2) Debt Consolidators Who Promise to Take Care of Everything 3) The Balance Transfer Trap
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