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How to avoid Bankruptcy thru Debt Settlement

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Junior Member
What is the name of your state? NY

Is it possible hire a consolidation company to negotiate for me for free and find a way to keep my credit in good standing without filing bankruptcy?


Junior Member
YES!!! I know this from experience because I am doing it now. I have 5 credit cards in "Debt Management" with interest rates negotiated from 0% to 11% (a huge relief from the +20% I was paying before). They also usually stop late and overlimit fees from occurring and put you in an automatic payment plan that you can afford. While being in debt management, you are not allowed to have any other credit cards, but they usually allow you to get financed for a car or house.

The one catch is that it does not keep your credit 100% good. Your credit report will still show a large amount of debt accumulated, but it's way better than just not paying. Potential lenders can look at it a couple of ways, either you racked up a bunch of debt and now you have to pay for it, or that you made a mistake but are taking responsibility for it. Your credit report will show that you are in a debt management program for the time that you are paying off your debt. I am told that the note on the credit report will be removed (or maybe replaced) when you have completed the program.

The other catch is that it is usually not totally free. I pay $7 per credit card I have in the program. But I choose to consider that a donation to keep the company in business, so that they can help other people like me. I use Debt Reduction Services in my state, but NY may have others. There are also tons on the Internet, but I don't know about their reputations.
And now for the rest of the story.

Almost ALL debt counseling / debt consolation companies are scams. None of them do anything that you can't do yourself...and it doesn't cost you anything (except maybe postage). There seem to be several different scams going:

1. Some companies do have "special arrangements" with certain creditors. In dealing with those creditors, they can arrange for lower interest and lower payments. But...if ALL you creditors don't play, these companies just ignore those and you wind up getting sued anyway. In effect, these places are collection agencies in disquise...they get a kickback from the creditors for getting you to pay...and they get paid by you to boot.

2. Some companies claim to have "magic plans" that make your debt go away. Basically, they recommend simply not paying until your debts are "charged off" and then they will negotiate on your behalf...except that they don't, and you wind up further in the hole than you started.

3. Some companies claim to know the "magic words" that get creditors to ease up on you. There are no magic words...these places fit into one of the two above.

Bottom line...avoid all these places. If you owe more than you can afford to repay, you really only have a few choices: increase your income, refinance your debt (not a good idea, trading unsecured for secured debt), stop paying and hope the collection agencies commit enough FDCPA violations for you to sue them, or file BK.

Look at www.creditinfocenter.com for more advice...


Junior Member
I checked the Consol. Company with BBB

But I found CCC from the website you gave me above and found out that they have a satistactory record with the BBB. So do you now change your mind about the Debt Settlement companies?

Thank you your website you have me above was VERY helpful.


Junior Member
RE: Debt Consolidation sevices.
I must have found a good company, because I watch my payment clear with each credit card company on my credit card statements each month. BUT, I am still paying a required "voluntary donation" to a "not-for-profit" company. Plus, I am scheduled to pay 100% of my debt owed (which is fair.) There's always a catch.

BUT BEWARE! They are not all honest, and it seems that you run an even higher risk with the more unscrupulous debt negotiation/settlement companies. Too good to be true usually is.
FRED_BK: Search the creditinfo web site. There's a long discussion about CCCS...which basically says they're better than most, but they still don't do anything you can't do yourself...cheaper.

KATIEWA: I'm glad its worked for you. I'm guessing, but I would bet that you've found a company that has ALL your creditors as clients. One thing you might do is look at your credit reports just to be sure that the info being reported is in line with the statements you're getting.
I called one of those places once and got a high-pressure rep. I backed out and didn't give them a penny. Since when does a non-profit organization use pressure tactics? Scam!


Senior Member
Do you KNOW who CONTROLS the so-called 'not-for-profit' CCCS companies ?? THE CREDITORS DO !!! THEY decide who gets a debt management plan (DMP) and they do NOT want people on DMP's -- they lose too much money. CCCS is nothing more than a COLLECTION VEHICLE for creditors and they want to keep you paying as much as possible for as LONG as possible. A large majority of people who go into these places wind up in bankruptcy anyway, and CCCS WILL damage your credit almost as badly as a bankruptcy - you're not doing yourself any favors.

That 'voluntary fee' is NOT voluntary.. you HAVE to pay it or you get dumped, that's the deal, and do you know who gets that 'voluntary' fee ?? Not the CCCS people, it kicks up to the creditors pulling the strings.

CCCS is bad news..


Junior Member
Really!! Even CCCS too!! WoW!!

Today I called a lady from CCCS and set up and appointment and she made it clear that they are NOT-FOR-PROFIT. She said, I need to only buy books for $50 that will show good on my credit. They asked to brink a paystub for the initial session with a certified counsilor. They seemed free and honest.

Are you sure that such charity organizations work for creditors?



Junior Member
olgethorpe said:
FRED_BK: Search the creditinfo web site. There's a long discussion about CCCS...which basically says they're better than most, but they still don't do anything you can't do yourself...cheaper.

KATIEWA: I'm glad its worked for you. I'm guessing, but I would bet that you've found a company that has ALL your creditors as clients. One thing you might do is look at your credit reports just to be sure that the info being reported is in line with the statements you're getting.
FRED BK: I pulled a copy of my credit report a couple of days ago and, ALL of my credit cards in debt management are marked as "Pays as Agreed". That's the same notation that the cards I had that I never had any problems with and closed a long time ago have. And only one of my cards even mentions that my payments are being made by a counseling service. But you're probably right about my creditors being clients, I have 5 major credit cards (big, well known companies). My debt managment counselor already pretty much knew what APR my creditors would lower me too.
Also, I was looking at CCCS, and it seems to me that there is a $10/month donation with them too. (I could be wrong) Smaller than the one I pay, but still a monthly fee.
Advice if you do choose credit counseling: close your credit cards yourself before the counseling agency starts talking to them. It looks better on your credit report, and a good credit couselor should tell you the same thing. Mine advised me to close them as soon as I got home after my first meeting.


Junior Member
Leave all your burdens & responsibilities alone, travel outside

I tried to negotiate with one MAJOR credit card company and asked the lady to let me speak with the supervisor. He wasn't nice. He kept saying bring your check book right now and make payment otherwise he wont be able to key in critical information!!! So I paid one payment and then after a couple of dayes later they called me and asked for another payment (hundreds of dollars).

So how do you negotiate with creditors without a CCCS?

I do not deal with unkind creditors. So I did extensive research on the Internet and found out the following for people who couldn't pay the minimum due:

1) Leave everything and your burdens behind for 7 years (or less) and make use of the statue of limitation (SOL). This is because the SOL will rid you of all your unsecured debt responsibility. In the meanwhile go to a foreign country and establish credit there. If you get a master card there, then you could still use it in the USA upon return. For example, if you are an American Citizen, then you could go to Canada and establish credit from day 1. No body would EVER find out your bad credit in the USA any way.

2) Find a CCS company that has a very nominal fee like $10/ month. Then one I found takes only educational fees (less than $20/month) and donations.

3) Apply for Bankruptcy but this should be the last resort after the SOL and CCCS somehow don't work. But CCCS may make you pay your creditors using a payment plan that might make you pay more than the minimum due your are paying right now!!

Actually these are not my ideas but I got them from multiple websites. It's HARD to negotiate with creditors and reduce the minimum due. So what could be done then?


Senior Member
Is the debt management company on your credit reports ??? If it is, or if any creditors note on your reports that they are being paid thru a DMP, then just THAT notation will poison your credit ! Creditors don't look favorably on that.

Fred_BK: Oh yes, I'm sure ! These are not 'charity' organizations, they are funded and controlled by the credit card companies. They find different ways to make you pay that so-called 'voluntary' fee - with yours you have to buy books (new one on me).

If you feel like reading and would like some enlightenment on CCCS, try this:


Its a lot of reading, but you'll get most of the facts in the first few pages, its a real eye opener.


Junior Member
Igonring your debt is better than CCCS!!!!

The file on http://www.responsiblecredit.com/resources/documents/ is an eye-opener!! Thanks Ladynred. You should get the fee instead.

It's better NOT to do anything regarding your debt rather than SEEK CCC.

So now I WILL never go for CCCS and will cancel my consultation appointment. I don't feel ginicing them my pay stub anymore after I read that pdf file (above).

Now instead of ignoring my debt and staying cool :cool: , what should I do if I don't want to do Bankruptcy?

I know now that TOTALLY ignoring debt (ignoring paying the minimum due) is BETTER than having CCCS services.
Bascially, your first concern should be keeping a roof over your head and your family fed. Then....

1. If there's no money left after that, stop paying ALL your unsecured creditors...wait 60-90 days...and file BK. You'll have to decide whether a BK 7 or BK 13 makes more sense.

2. If there is money left, make a budget. Divide what you can afford to pay up by the balance on each unsecured creditor. Send a letter to the executive offices of each OC saying "I know I owe you money, I want to make it right, here's what I can afford to pay, can you work with me?". Don't bother calling...you'll just get a minimum wage clerk (maybe not even in this country) who has a script they work by. If you can get ALL your creditors to except this, stick to it and you'll eventually be okay. If one or more don't accept this, then pay according to your plan anyway...but realize that eventuallly you may wind up in court with the nasty ones. At least then you'll have evidence to put before the judge that says you tried to work it out. Doesn't mean the judge will accept it...but...

Anyway...good luck...


Senior Member
Yes.. that is one kicker of a document ! :eek: I knew CCCS wasn't good, but I had no idea just how really BAD they were until I read that document.

What it really says is that if you can find a LEGITIMATE CCCS-type company that is a for-profit company, you'd be better off because those are NOT funded by the credit card companies. The downside, naturally, is that those will cost you a lot of money in fees.

That 'walk away and travel' thing you posted is pretty out-there. If you live in a short-SOL state, like CA, TX with 4 year SOL's, or 3 year SOL's like NC, SC, AR, and a few others, you can probably duck for 3 years and then you only have to wait out the other 4 for your credit reports to clear up on their own.

NY has a 6 year SOL for credit cards, so its a bit harder to lay low. A lot depends on how much you owe and whether or not you own property. People with property probably face a bigger chance of being sued because the creditors can attach liens and threaten your home. Some of it depends on the creditor. Discover would sue your dog for the price of his rawhide bone, while other creditors and/or collectors rattle their swords a lot but sue rarely or not at all. They rely more on intimidation to make people pay up.

To just walk away from your debts, lay low until the SOL runs out is called an 'informal bankruptcy'.

How do you handle creditors ?? Its not easy, you're right. If you're not near charge-off, most of the simply will not 'deal'. As sad as it is, you've actually got a better chance of settleing for less once an account is sold off to a junk debt buyer. They buy old debts for pennies on the dollar - then try to collect the FULL amount plus all those fees. Most of that, if they get it, is pure profit.

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