I have received several calls in the last week from prospects that were considering signing with a Debt Consolidation Company. First issue voiced was the cost of 25%, and second concern was what this could do to their credit. If you know of anyone considering this move, or bankruptcy, please insist they need to talk with Austin Credit Group before they pull that trigger!
PLEASE CALL ME BEFORE CALLING THESE PEOPLE!
THEY RUIN PEOPLES’ LIVES!
Debt Consolidation by definition is not what these companies do. They approach your creditors, and attempt to negotiate the interest, and balance down with the promise of a consistent payment. The company collects a payment from the customer, and puts 20%-25% in their pocket, then splits up the rest to the creditors.
The accounts will be effectively closed, and if the account was in arrears before putting this plan in place it could likely continue to report late until what was late is caught up.
One promise the customer has to make is they cannot apply for any new credit while under this program. All the accounts in the program will report negatively for 7-years after the last payment is made. This makes it even more difficult to bring your credit scores back up than having done a Chapter 7 Bankruptcy.
Bankruptcy is an absolute last resort! My clients don’t go through bankruptcy unless I tell them to go through bankruptcy. I have only sent seven people in that direction. Most have come back to rebuild their credit after it’s release. There are so many options to consider before taking this step, but debt consolidation companies is not one of them!