Question: Thanks to everyone in this group who have responded to my questions lately, you have been very helpful.
I have $37K in credit card debt. This wasn’t an accident, I lived off my credit cards while I was in school and now I have a stable job making $50K+/year. I hate credit cards and I will never do this again. I am closing all of my accounts and destroying my cards. I can make my payments and I am paying down debt in excess of $400 per month. I have done the math and figure I can payoff the $37K in 6 years.
Today I was talking to a bank that I have a card with (MBNA) and closing my account with them. He told me that with my high balances, I should definitely consider debt counseling. I asked him about the negative mark on my credit report and he said that it would not put a negative mark on my credit report. Now I really confused. I have heard nothing but the opposite. I will probably want to buy a house in the next 5-7 years so I don’t want a huge black mark on my credit report.
Should I consider debt consolidation?
Answer: Debt counseling and debt consolidation are two very different beasts.
To me, it sounds like you’ve got your head screwed on straight vis a vis debt, so I’m not sure why you’d want to get debt counseling.
Debt consolidation, OTOH, might be worth looking into. I wouldn’t waste my time with debt consolidation “services”, ‘tho. Instead, see if you can track down some lower interest unsecured loans (credit unions tend to be a good place to look) and pay off the credit card debt (assumed to be very high interest) with the lower interest loan. Just don’t lower your payment if you lower your interest rate — the whole goal here is to get the debt monkey off your back as quickly as possible, before you get saddled with other monkeys (usually referred to as a house and family). I am glad to see that you are doing your research. Debt counseling is ok, but you already have one solution…pay it off. There will be nothing substantive beyond that that debt counsel can offer. Six years is a long time and a big hit on the pocketbook.
There are other alternatives but stay away from consolidation, settlement and negotiation. They all will leave you with damaged credit during and after your payoff since you will be regarded by creditors as a risk just as if you were in reorganization similar to chap 13 bankruptcy. Not beneficial to you.
Continue to research and consider these two options. One is true debt resolution; the other is nominee exchange. If you wish to learn more, as there is too much to explain on a forum
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