It is just as bad as a bankruptcy, as far as credit reporting goes…

Avoid it if you can…

A debt consolidation company won’t do anything you can’t do yourself. They contact the people you owe money and negotiate a settlement. Then they pay that settlement using the money you give them. In many cases, this can have a bad effect on your credit either way, so it’s better to do it yourself.

I used a debt management program to pay off over $26,000 in credit card debt and it was the best thing I ever did!!! I had to give up all of my credit cards and learned that I could live without them. I learned how to budget my money for monthly expenses, everyday expenses and how to save for long term. You may have to be willing to give up some expenses (cable or eating out a lot) to make your budget work, but trust me, in the end it was all worth it. It is such a satisfying feeling to do fun things (go on vacation) without using credit cards!!! I have so much more money now that I have my credit cards payed off!!
When I first started the program, a couple of the cards showed that my payments were late because you have to be in the program for 3 months before the creditors will accept the details of the program. Yes it does come up negitively on my credit report, but I feel that this is a very small price to pay to not have any credit card debt. Having large amounts of debt also shows up negitively, you have to decide which negative you want…I still have been able to purchase a home and I opened one credit card (they gave me an $11,000 limit) to use responsibly!! I don’t know my exact credit score right now, but it is around 670….which is not bad.
I would not have been able to pay off my credit card without this program. They are able to negotiate your intrest rates. I had one that went from 22% to 9%….most of them went to 9% Except for Discover card….they are not very good at lowering the rate.
I would highly reccommend a credit couseling service to anyone with credit card debt. Just make sure that you use a non profit service. Go to this is what I used. You can at least schedule a free consultation with a counselor and they will be able to answer all of your questions. They will also look at your income vs. your debt and help you budget. They will look at all of your credit cards and tell you how much you will have to pay each month and how long it will take to pay it off. My plan was set up to have it payed off in 56 months - that’s less than 5 years vs. probably 30 years if you just pay the minimums. If you want they will also set up the program so they are paying all of yor bills (house, car, utilities etc…) I just did credit cards.
I highly reccommend a credit counseling service… GOOD LUCK

well, I don’t promise anything but
people in debt often seem to find some help here :
and here
good luck!

The answer is yes. Your husband is correct and it does have a negative effect on your credit. Try telling your creditors that you are trying to avoid filing for bankruptcy, which will given them nothing, and are looking to see how they can help you to work out the debt with as little impact on your credit as possible.

I go through a not for profit credit counseling service such as the previous answerer did. They helped to lower my interest rates. My interest rates skyrocketed before I consulted them because I could only afford the minimum payments. I give them a small donation each month to help with their costs. I would not recommend taking out a home equity loan or anything of that nature because if something happens and you can’t pay, your house is at stake. With credit counseling, you don’t have that to worry about. Be careful because many companies are out there to scam you. Go to clarkhoward.com to get more info on legit credit counselors.

Pay off the cards but keep the accounts open. You earn points for having an account that is kept current (no payments more than 30 days late). This includes an account with a zero balance. A credit report will reference the account’s high balance and current balance. If any of your cards have a yearly fee, I’d go ahead and close those ones.

The Credit Counseling company will probably get you a better price in the long run because they will negotiate a lower rate than you can. But, you are being charged a very large amount of compounded interest on every dollar that you owe them for every Month that the amount is owed. Let Mom and Dad help IF the interest rate and terms are better than you are currently paying the credit card companies. And, if you can afford to pay all of your bills iccluding that payment. Remember that the credit counselor is making money on you, they will not always counsel you to your advantage.

The following articles should answer all your questions:

Debt Consolidation - Get Out Of Debt

How to Hire a Debt Counselor?

What is Debt Relief?

Debt Management and Building Wealth

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