should my husband and i settle our debt or should we go through a debt consolidation?
Feb 28, 2009 in
Personal Finance
cindi_chean
We are about $2300.00 in debt with alliance one and i think $900.00 in capitol one. We have a debt consolidation with Federated Financial. But I was thinking that maybe we should just settle with both of the debts ourselves because federated financial charges $29.00 a month and it will take us like 3 years to pay it off, if we go through them. What is the best choice?
We are about $2300.00 in debt with alliance one and i think $900.00 in capitol one. We have a debt consolidation with Federated Financial. But I was thinking that maybe we should just settle with both of the debts ourselves because federated financial charges $29.00 a month and it will take us like 3 years to pay it off, if we go through them. What is the best choice?
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6 comments
PelMel on February 28, 2009 at 7:32 pm
If you “settle” by paying only a portion of the debt, the debt will come back to haunt you in several years when the bank sells the bad debt to a collector. It is best to pay off the entire debt either through your payment plan or to pay off the entire remaining balance. $3200 isn’t that much money. If you don’t want to pay the $29 fee, think about getting a part-time job and earn extra money to pay off the balances sooner. If you can, pay the smaller debt off first, then you can focus more money on the larger debt. Good luck!
update: The fee does seem high. I don’t know if it’s possible to transfer to another debt management program, but I always recommend Consumer Credit Counseling Service. They are reputable, non-profit, and nationwide. Their fee may be lower. Link below for the Atlanta office, but you can find one closer to you.
r&s mom on March 1, 2009 at 9:15 pm
I would stay away from the debt consolidation place. Do you work? If not get a little part time job- If you do work get a second job (I know you don’t want to but its only temporary). Pay all extra money to your debt. Look at your budget (if you don’t have one you can download free forms from (he is a financial counselor). Look over you budget – perhaps you can divert money from your grocery fund etc and pay off this debt. $3200 isn’t a ton of money – you can pay it off !!
cbmttek on March 2, 2009 at 8:20 am
First of all you are looking at about $3,200 in credit card debt. That is not really all that much in the larger scheme of things.
If you were to pay $29 a month for three years to a consolidation company, the fees would add up to: $1,044, approximately 1/3 of your debt. There is no justification for that kind of expense.
If you dedicated that $29 a month extra to paying off the credit cards, it would make you debt free faster, and help to improve your credit rating and score.
samoan3d on March 4, 2009 at 8:50 pm
I would just get a personal loan to cover the $3200 and pay off the debt. This way you don’t have to worry about the credit hit you would get from “settling” your debt. You also won’t have to worry about a monthly fee that doesn’t go towards principal or interest. You can get a personal loan rather easily using P2P lending. You can get a $3200 loan and have about a $100/month payment. Here is the site that I use, . It is free to sign up and get a rate quote, so you don’t have to worry about a catch. If you sign up, let me know your username and I will try to help fund your loan.
Feeling Mutual on March 7, 2009 at 12:52 am
Debt Consolidation usually costs you more in the long run.
Don’t settle, forgiven debt counts as income on your taxes.
1. Pay off the highest interest card first. If you cannot, find a zero interest card that will let you transfer the balance for a year.
2. Repeat Step 1 until they are all paid off
★★★ Katharine ♥♥♥♥ on March 7, 2009 at 10:12 pm
Coming from someone who has perfect credit: and not rich – there are a few things I never understood. If you have debt in the amount of $2300 – why would you PAY somebody for debt consolidation. that money could go towards your credit card. I would just keep paying on the credit card – learn to live within your budget…and maybe try putting more towards credit cards. I would NEVER dish out more money then I had to. and search around for good rates on credit cards until it is paid off