My name is Crystal. I accidentally find your website, and feel it offer very helpful information about debts. I have five credit cards, Chase-19%, Macy’s Visa and Revolving-24.50%, two American Express were 12.24% and 16.24%. I am been paying for three years, but interests get higher and higher each year. After three years, my balances still the same. I was trying to pay more than minimum which about $700-$1,000 totally each month. However, this left me no cash for rest of month.
Macy’s is behind the payment for three months now. I tried to talk to my creditors for better advise and low interest. American Express dropped 1% interest rate. Chase didn’t give me any chance to talk to them and Macy’s give option to close the account.
I calculated all the debt. I owe about $20,000 credit card debts. If I only pay minimum, I have to pay 16 years, and interest will be $16,000. If I double my payment each month, I don’t have such money.
I found “Fast Track Debt Relief” company online. They said they only charge one fee is 15% of my total debt. They help me reduce 45% of amount. I only have to pay less than $500 each month for all my credit card payments. Still, I will debt free in three years. They also tell me all my money will go to a trust fund. However, first three payments will consider as service fee in the trust fund. There are so many scams. Even though, I read many article about how to find a good settlement company, I still worry I would put myself in a worse situation.
For my situation, What should I do better to get rid of my debts? Should I ask help from settlement company to put all my payment into one?How do I find a good company or agency to help me? Is “Fast Track Debt Relief” company reliable? What kind of questions should I ask them? What document should I ask them to sent to me? Is fine to let them sent documents through Email, or request for mail documents?
I am sorry to ask you so many questions. After I read many pro and con article about these companies, I am very scare the company I choose would put me into a worse place.
Thank you so much for your help.
Thank you for contacting me.
It seems we have several issues going on here so let me tackle them each individually.
You appear to be frustrated and anxious to resolve your financial situation. Sometimes this anxiousness can lead to impulsive decisions that are not in your best interest. You are wise to look around for information on different options in order to help you make the best decision for you.
It appears to me that your primary goal is to find a way to get your debt under control and eventually eliminate it. Debt settlement is one approach but it is not as easy as you may have been told.
Fast Track Debt Relief
I’m concerned that the message you heard from Fast Track Debt Relief is that your payment will only be $500, your debt will be reduced 45% and your debt will be eliminated in three years. I am however encouraged that they seem to have clearly explained to you the fee for their services will be 15% of your total debt and the fee will be paid up-front.
On the home page of their site the message seems to be celebratory. – Source
But the path to a potential debt reduction is not without it’s risks and hurdles. The success rate or failure rate of debt settlement clients is huge. It is said that 65% of consumers drop out of debt settlement programs after paying fees but never settling a debt. The industry says 34% of consumers settle debts, but research has found that only about 10% of people actually settle all their debts.
It might be hard to find but in this disclosure statement on the Fast Track Debt Relief site it says:
Your creditors may continue collection efforts on delinquent accounts while you are enrolled in a Debt Settlement Program. Such collection efforts can include phone calls and letters to you, charging off the account, sending accounts to collection agencies or attorneys, lawsuits and even garnishments of your wages if a judgment has been obtained Fast Track Debt Relief, Inc. no claim that it will be able to stop these collection activities. These activities may continue while Fast Track Debt Relief, Inc. is making its best efforts to negotiate your debt.
If you do not make required minimum payments to your creditors you may be breaking the terms of your agreements with them and your actions will probably be reported to consumer reporting agencies as late, delinquent, charged-off or past due balances. Your creditor may also raise the interest rate on your account and impose other penalties. Your account balance may continue to grow as your creditor adds accrued interest, late fees, over- limit fees and penalties. Your balance may continue to grow until a settlement is reached with your creditor; and, if negotiations are unsuccessful, you could be called upon to pay the entire balance. After settlement your creditor may comment that the account was “settled for less than the full amount” on your credit report. A Debt Settlement Program may have an adverse effect on your credit report and credit score.
Outside of the hard to find disclosure link the Fast Track Debt Relief site seems to be light on warnings of the possible consequences of enrolling. The consequences can be severe and very stressful.
Is Debt Stress What You Really Want?
From reading your question I am under the opinion that more debt stress is not what you are really going for here. And debt settlement can significantly add to your stress level unless you are prepared to get continual collection calls, risk being sued, want a bad credit report and face possible tax consequences from the forgiven debt.
It just seems like this situation has been stressful enough on you already. maybe we need to look at some other options and see if they might be better suited for you.
Is Credit Counseling the Answer?
In a traditional non-profit credit counseling program your creditors would reduce your interest and you would make continued monthly payments till the debt was gone. Typically this takes five years. In the debt management plan your monthly payment would be about the same as what you are paying now. You would not get collection calls as long as you continue to make the payment.
If your issue is the interest rates alone and you can afford the minimum monthly payment then a traditional credit counseling program might be a good solution for you. You can click here for credit counseling information.
Is Bankruptcy Right for You?
The Fast Track Debt Relief web site says it is a “Better alternative to Bankruptcy” but I don’t see how.
In bankruptcy most people eliminate their debts within months, your creditors and collectors could not call you, you can’t be sued, your wages can’t be garnished, and while your credit takes a hit, it can be easily rebuilt.
Bankruptcy makes sense if you simply can’t afford your current debt and you are finding it tough to get by. In that case you should click here to find a local bankruptcy attorney and go talk to them.
Crystal I think you need to do some more research first and talk to a credit counseling agency and a bankruptcy attorney before you leap into any solution. More information only gives you a better ability to make a decision that is right for you.
If after talking to the credit counseling group and bankruptcy attorney you feel debt settlement is still the path you want to follow then I suggest you contact Damon Day for an independent consultation so he can potentially guide you to a debt settlement company that might charge you far less.
Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.