Debt problems? - Chicagoland Sportbikes
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post #1 of 12 (permalink) Old 03-31-2004, 08:48 PM Thread Starter
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Debt problems?

A guy I know is telling me about somehing he is planning on doing that sounds fishy to me. He said a certain company will deal with his creditors so he only has to pay back half of what he owes.. He owes just over 40k and will have to pay back 21K. But this company will take an extra 6k. Now that sounds great but they give no gaurantees and they take a monthly installment out of his bank until they are paid up then he is given so many months to come up with the amount that is owed to his crediters (which he probably don't have the will power to do). So my quwstion is is this legit. Does someone here work for one of these companies. Does somebody here ever use one of these company's or know someone who has. I would hate to see my friend get in deeper than he already is!


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post #2 of 12 (permalink) Old 03-31-2004, 08:57 PM
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What kind of debt is it? Is it credit card debt? If so, than they might be able to do that. HOWEVER... it will show up on your credit report as working with a debt consolidation company, which looks just as bad as bankruptcy. They can do that because they make a deal with the credit card companies. They agree to reduce debt and or late fees/over limit fees in return for payment. I know of one in particular, Ameridebt, who doesn't garauntee that your bills will be paid on time. If you owe them so much at the beginging of the month, they divide it up accordingly, but not necessarily before each credit card is due... Kind of shady I think. Tell him to do a search online of the company he's thinking about going with and look at some message boards. He/she can get a good idea of what they're into from that. My suggestion is dicipline... Good budgeting is better than any debt consolidation or bankruptcy. One thing to consider (although credit may be a problem) is to go for a low introductory intrest rate credit card, transfer balances, and keep the balances moving... You can close the account once the intro period is over and do it again with another. Just my .02

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post #3 of 12 (permalink) Old 03-31-2004, 09:01 PM
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Better watch ALOT of them places are shady. they don't pay the bills as they say. They charge hidin charges. There was just a write up in the Herald New i think about how the government is going after these shady places.


Definetly do a search on them before going thru with it.

I Personally WOULDN'T do it.


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post #4 of 12 (permalink) Old 04-01-2004, 01:09 AM
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I also was going to do that with a company intill the place I was getting the loan for my house no way they'll rip you off! They told me to contact the credit company direct and make a deal with them! Some of them settle for .50 on the dollar!
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post #5 of 12 (permalink) Old 04-01-2004, 06:58 AM
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Personally, what he should do, if he can (listen up folks I rarely give this kind of advice for free) if he has a 401K plan or IRA is give himself a loan against those accounts, the loan rate is usually about 9% and a small loan set-up fee, about $100. You take that money pay off your debt (most Americans carry 26K in unsecured debt) pay back your 401K or IRA account, because now instead of paying minimum payments and obscene interest charges, you have saved money, and that 9% interest rate....your paying to yourself, only drawback is close or rollover those accounts, you have to pay off the loan immediately or it becomes taxable income.

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post #6 of 12 (permalink) Old 04-01-2004, 07:57 AM
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Before he does that, tell him to get this book and read it. I've heard a lot about this guys books and they are suppossed to be an awesome tool to help one get out of debt. And from some of the stories I've heard that this guy has helped, your buddy is not that basd off with 41,ooo in debt.

http://www.amazon.com/exec/obidos/tg...books&n=507846




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post #7 of 12 (permalink) Old 04-01-2004, 07:58 AM
 
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I've used both unsecured debt consolidation personal loans and picked up a few 0% introductory cards along the way. In the last 6 months I finally found the discipline to stick to a budget as well. I was baisically trying to live at a higher income level for the last 2 years and the 4 years in college. Now I have to survive at a smaller income and get out of the red.
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Sounds like this guy may have bad credit. Although I have tons of debt, I also have a very good credit rating becasue I pay dozens of bills on time and have closed out several accounts.

This guy might want ot consider bankruptcy if his income is under half of the debt. IMO, you can survive if your unsecured debt is equal or less than half your annual income. This does of course does not include student loans (low rate, tax deductible) vehicle loans or mortgages.
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post #8 of 12 (permalink) Old 04-01-2004, 08:13 AM
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Quote:
Originally posted by RickC1957
Personally, what he should do, if he can (listen up folks I rarely give this kind of advice for free) if he has a 401K plan or IRA is give himself a loan against those accounts, the loan rate is usually about 9% and a small loan set-up fee, about $100. You take that money pay off your debt (most Americans carry 26K in unsecured debt) pay back your 401K or IRA account, because now instead of paying minimum payments and obscene interest charges, you have saved money, and that 9% interest rate....your paying to yourself, only drawback is close or rollover those accounts, you have to pay off the loan immediately or it becomes taxable income.
To be more precise (I am a TPA), loans are usually for prime or prime +1, so you are currently looking at 4 - 5% interest. The loan cannot extend beyond 5 years, and usually require that payments are made by payroll deduction. If no loan payments are made for a quarter, the loan can become a deemed distribution, subject to a 10% penatly and ordinary income tax

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post #9 of 12 (permalink) Old 04-01-2004, 09:45 AM
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I've heard this advertised on the radio. It was an ad with lots of open-ended phrases like "possibly no bad credit reports to you". I certainly believe this is possible to do with unsecure debt. If its a car or bike or whatever the creditors wouldn't care, they'd just take your collateral. But with credit cards I think you could even do this yourself. Just hire a lawyer, call them up and explain to them you can't pay. That'll put them into the old "something is better than nothing" mode. Negotiate with them what you can afford to pay and sign a written contract drawn up by a lawyer as far as what you will pay and that they will not report it to the credit agencies.

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post #10 of 12 (permalink) Old 04-01-2004, 10:03 AM
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Quote:
Originally posted by Crazy
Just hire a lawyer, call them up and explain to them you can't pay. That'll put them into the old "something is better than nothing" mode. Negotiate with them what you can afford to pay and sign a written contract drawn up by a lawyer as far as what you will pay and that they will not report it to the credit agencies.
Tried that... I told them that I was going to file the big "B" and they said "yeah, so"... I said, well, let's work something out so at least you get some money... and they told me to get bent. I talked to like 5 different people at the same office. No dice. Has this worked for ANYONE? Or is it just an urban legand?

<-------- Jeff


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post #11 of 12 (permalink) Old 04-01-2004, 10:06 AM
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Quote:
Originally posted by Pirate
Tried that... I told them that I was going to file the big "B" and they said "yeah, so"... I said, well, let's work something out so at least you get some money... and they told me to get bent. I talked to like 5 different people at the same office. No dice. Has this worked for ANYONE? Or is it just an urban legand?
Lawyers can be very convincing. They want to see your serious. Otherwise every Tom, Dick, and Harry would do this.

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post #12 of 12 (permalink) Old 04-01-2004, 12:43 PM
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Quote:
Originally posted by tripod
To be more precise (I am a TPA), loans are usually for prime or prime +1, so you are currently looking at 4 - 5% interest. The loan cannot extend beyond 5 years, and usually require that payments are made by payroll deduction. If no loan payments are made for a quarter, the loan can become a deemed distribution, subject to a 10% penatly and ordinary income tax
exactly....thanks for the clarification

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