Anybody try one of those debt-erasing programs?

[kedrys]

I'm just curious...we're two nose hairs from filing Chapter 7, and I'd like to know if there are any realistic alternatives out there...

[Deja Q]

1. Debt-erasing (forgiving) programs are worthless:

They only reduce your load by up to 50%. Everything forgiven becomes taxable income. The net balance is almost as much as what you started out with.

I did credit counseling, where they reduced interest rates and payments. It's also better than debt consolidation, which is one loan and has an even bigger hit on your credit rating. (my rating has gone up since going into counseling and I'm almost paid off.)

[kedrys]

2. Whoa.

Thanks for the info! We're pondering our next move, and filing includes having to get some counseling, so we may be able to skate a bit there.

[judaspriestess]

3. debt erasing?

you are probably better off filing chapter 7. Heres why: These credit cards are still going to show up late on your account and will report like that for months. your ficos are going to take a dump and credit is fico driven. if its debt consolidation, you have to be in a year before you can buy a house, if you don't already own one and they will count the debt against you. Your accounts will be also be closed which will not help your credit.
if you file a ch. 7, you can recover fairly quickly and rebuild your credit. I know many people who have credit scores in the high 700's who filed bk's. The key is rebuilding your credit and keeping it clean after you file. The other important thing to do is make sure that if you do file a bk, your credit cards are "zeroed" out on your credit report. If they show still owing, that will have an adverse affect on your credit because they look like an open collection.

I just filed a bk, I mourned my credit that I worked so hard to build but I work with mortgages and real estate and its not so bad. I can rebuild, thats why bankruptcies are there, to give us a fresh start.

hope this helps.......

[kedrys]

5. Good to hear Ch 7 works

It's a last ditch, but our credit is already taking a dive, and the s.o. just got let go at work, so we're scrambling. At least we have a roof over our heads.

[LostinVA]

4. Go Chapter 7

They don't erase debt, the huge majority are scams, and it actually is WORSE for your credit than a C7.

[kedrys]

6. Thanks

I would have gone into credit counseling (the legitimate kind) last year, but I got some bad advice on how it would affect my credit rating, and I sank myself further because of it. I'd gone through credit counseling once before, and it was fine - many laws have changed since then. The s.o. gripes that we should have filed last year...probably right. :shrug:

This is not going to be easy. Thanks for posting your info.

[Floogeldy]

7. Nothing erases debt except paying it . . .

. . . or bankruptcy. :smoke:

[hickman]

8. I went to credit counseling in the late 90's

It was great. They negotiated with everyone I owed, and I payed down my debt load without living in a box under the railroad bridge. Unfortunately George W Bush signed legislation as soon as he walked into the White House that made credit counseling crash your credit rating, so I had to get out. I can crash my credit for free.