Ask The Get Out of Debt Experts Bankruptcy Related Debt Settlement

Should I Go With CareOne or Debtmerica to Eliminate My Credit Card Debt? – Zeeshan

“Dear Steve,

Hey Steve, I recently piled up a bunch of credit card debt trying to pay bills, it wasn’t a problem paying them off until I got into school where I do not have a source of monthly income but do get a little help from my parents. I am just unable to pay rent, food, gas, and credit card bills monthly anymore. The interest is just piling up so the monthly payments don’t really dent the amounts at all.

So I have about $20k in credit card debt, I was looking at working with companies such as CareOne or Debtmerica to settle an amount with my credit card companies. However they said they can reduce my monthly payments to around $370 from the $520 a month I pay and both say by the end of the program I will have paid $16000 total in about 4 years. Of course I would plan in paying it off sooner than that. However each company is taking about $6000 in fees. Is that the way to go for me or is it better to just not pay the cards and try to deal with the credit card companies and go to court personally? Trying to get some advice on which way you would recommend. I feel like paying these companies $6000 is a lot even though it will help me out a lot and save me a lot in the long run.

thanks

Zeeshan”

Dear Zeeshan,

I’m not convinced that entering into any payment program is going to be the right move for you. While entering into a debt settlement program might look attractive it would only lower your payment a bit and not enough to help you save.

As it is now, you’re struggling. So if you pursue the debt settlement route you’ll pay $6,000 in fees, risk being sued by your creditors, wind up in collections, hurt your credit rating and take two to four years to attempt to settle your debt. Even then there is no guarantee you will eliminate all of your debt.

See also  How Do I Get Out of My Agreement With Consumer Law Group?

I worry more about you building up some savings at this point in your life. You’ve lived on the financial edge for so long that if you did not have credit to fall back on, what would you do in an emergency? Here is a recent video of mine that seems to address your situation rather closely.

I think before you do anything you need to meet with a local bankruptcy attorney. Bankruptcy would eliminate your debt, give you some real room in your budget to save and protect yourself, and most importantly it would stop all collections and block all lawsuits. Bankruptcy would cost about $1,500 and your debt would be wiped out in a couple of months rather than a few years.

You can click here to find a local bankruptcy attorney and if you’d like a second opinion about your situation or a personal consultation by another debt coach, please feel free to contact Damon Day.

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.

Sincerly,
Steve

You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.




About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

40 Comments

  • Just to clarify, and not to promote BK or Debt Settlement, what was said above about a bankruptcy disqualifying you from getting a mortgage for 10-15 years is not true. A chapter 7 will disqualify you for 24 months AFTER discharge. A chapter 13 will DQ you for 24-48 months after discharge. Ask any mortgage lender about current underwriting guidelines to verify. During this time, while you are disqualified due to the BK filing, your debt is eliminated, greatly improving your debt-to-income and debt-to-credit-limit ratios. You can also rebuild a good payment history by wisely using secured credit cards so that you will have a good credit score again by the time your disqualification period ends. My girlfriend filed a chapter 7 in April 2008 and her credit score was back up over 700 with all three bureaus within one year. If you want to understand “how credit works” in order to choose your best option to get out of debt, then here’s a free video that makes it easy to learn: http://www.debtgotoguy.com/cre

  • Zeeshan,

    Please come back and update me on what you decide after you talk to the bankruptcy attorney. We can work through this together and the best approach is to consider all options carefully and then make a decision which works best for you, your life and your situation.

    Steve

Leave a Comment

Scroll to Top