<p>I’ve searched and couldn’t find anything on CC about this. Has anyone gone through consumer credit counseling – I mean, the kind where your credit card debt is reduced and it’s usually a five-year program to pay everything off – I’m wondering if there is any effect on the potential for your child to get financial aid, in particularly loans. All these credit counseling companies SAY that your financial history is not negatively impacted (like it definitely would be if you had a bankruptcy) but I’m wondering. We’re within three years of having our house paid for and we have no late payments on any bills for anything, but we have a LOT of credit card debt. Just wondering if we should hang on until the house is paid for and then we’ll have a lot more $$ each month to pay off the plastic, or whether we should suffer through credit counseling. I’m not interested in hearing any lectures about how we never should have gotten to this point; I already know all that and I’m not going into the past. I’d just like to hear if anybody else has been at this point. Oldest child is currently a junior, so we’re looking at colleges in about a year and a half. Thanks for any insight.</p>
<p>Well, I have not been to CCC but know people who have. It can negatively affect your credit but since most companies agree to put “paid as agreed” on your credit report, the negative impact is minimized and is nothing like the type of bankruptcy where lenders write off your debt as bad. It can be similar to a restructuring type of bankrupty. As far as student loans go, the only thing I can think of that may impact you is your debt/income ratio. I know if it hits a certain point that lenders stop issuing loans/credit. One thing you could do is get a list of lenders the school works with (they usually can recommend a few) and then call and ask a couple of loan officers what the impact might be. Is there any way to pull equity out of the house to pay off the (presumably) higher interest credit card debt? I know refinancing is rough right now but if that is an option, then I would suggest it before you go through with the CCC. Another way to get information is to make an appointment with a bankruptcy attorney who offers free consults. Not saying you want or need to consider BK but the attorney may give you some perspective on possible negative consequences of consumer credit counseling services. Another source of information is your mortgage broker. They tend to see many different situations and might know how lenders look at the CCC in general. If you do go through with CCC, do it with a non-profit, reputable company. There are a lot of sharks operating in the marketplace right now. Good luck in 2010.</p>
<p>I have not done credit counseling, but we realized a couple of years ago that we had debts we needed to pay down in case our job situation changed; also, our debt to income ratio would probably have had an impact on getting student loans.</p>
<p>We are at the point now where we would probably qualify for loans; however, I am uncomfortable taking on a large amount of new debt while we are still paying down the previous debt. This has impacted the whole college search process. We do not have enough saved to pay full freight at an expensive private college. My son does not have the stats that would garner him large merit aid at more selective schools. As a result, he is looking at lower ranked privates and in state public schools ( also a couple of OOS publics).</p>
<p>If your house is almost paid for, could that be a source for paying off your cards now? (and not running them up again as some have), or even using home equity to help pay for college?</p>
<p>cg…if you are eligible, you should definitely consider refinancing your home to pay off the credit card debt. You are probably paying thousands of dollars in interest (averge credit card interest rates are in the high teens or more!) versus a home equity loan which could be as low as 4% (even less for variable rate loans but I wouldn’t recommend those for your situatiion). I can’t answer your financial aid questions, but if you almost own your home entirely, using that to make the credit card debt go away is a no brainer.</p>
<p>First, the parent PLUS loans only require a cursory check for severely negative credit, ie. bankruptcy. However the rate is set by the gov’t (currently around 8%, I think) although some lenders seem to offer discounts for auto payment, etc. Afaik, you can choose to defer payment until after the child graduates although paying at least the interest would be wise.</p>
<p>I would not use home equity for cc debt! Why swap secured debt for unsecured? If something else happened, such as a job loss, there could be very serious consequences. There are many other ways to reduce cc interest and debt, including working out a fixed payment plan with the cc company. They will often accept a very low rate (0-3%) if you agree to a fixed, automatic monthly payment. They will reduce your cc limit or close your account, but it will get that debt paid off quicker!</p>
<p>The first thing you need to do is get a copy of your credit score. That will answer your question about how all of this is affecting your score. Also, your focus should be on paying off the credit cards. If your house is paid off, the colleges will consider the equity as $$ that you can use to pay for school. If you are in control and NOT using your credit cards at all then it might be a good idea to use your equity to pay off the credit card debt and then put all the $$ that was going toward the cards toward the loan. If you are still using your credit cards this would just create a nightmare… Good Luck!</p>
<p>Be very careful about using these services. Check them out very carefully, a lot of the ones you see heavily advertised are nothing short of scams. Some of the most important things to check are: make sure they are a non-profit agency, that their fees are reasonable AND set on sliding scale depending on your ability to pay, that they are accredited. Check out this page [How</a> To Choose a Consumer Credit Counseling Agency](<a href=“http://financialplan.about.com/od/creditcarddebt/a/ChooseCCS.htm]How”>When To Seek Debt Counseling)</p>
<p>If you have a financial planner you should check with them before doing anything, they may be able to help. Another place to check is with your Social Services clearing house agency. They should have listings of those Credit Counseling groups that are fairly safe, but still check them out yourself.</p>
<p>Thanks, everyone, for the info. We are in the process of looking at the home equity loan. And, yes, lol, if we do end up going the CCC route, I know to be sure and go with an accredited organization and not the ones that advertise at 11:30 at night on the TV channels. I just hope we can dig out on our own.</p>
<p>We used CCC after a long period of unemployment and credit card bills to pay for health care and food.
The agency negotiated for us with the card companies , interest was lowered or eliminated and it was much easier to give the CCc a consolidated payment for 18 months than not being able to make a dent in the principal owed because of interest.
It effected credit for a short while I am sure but that didn’t affect our bottom line as much as not having enough money to pay the debt.</p>
<p>They were very good to deal with, nonjudgemental and kind. I was glad that we had that resource.</p>
<p>emeraldkity4, this may sound like a stupid question, but are you allowed to keep a credit card (for example, American Express, which has to be paid in full every month anyway)? For example, if you need to make a hotel reservation, you have to give a credit card to hold the room (whether you pay for it that way or not). How do you do that otherwise? </p>
<p>You mentioned 18 months . . . I’ve heard it can be up to five years. I guess the period of time is based on how much you need to pay off??</p>
<p>Yes how long depends on how much debt & how big of payments you can afford.
The CCC weused was non profit, although they do ask for a small donation to cover operating costs.
Most debit cards can be ID with visa or MasterCard and hotels/airlines are happy with that. Don’t know about rental car companies though.</p>
<p>Thought I’d report back with what’s happened. Tomorrow, we are closing on a new home equity loan that will pay off the remainder of our existing mortgage and give us enough proceeds to pay off nearly all of the credit cards. We were fortunate that we have always paid all our bills on time and were not behind on anything – just not able to get ahead in any respect on the cards. Our usual mortgage/credit card monthly payments will be cut nearly in half, so we can use the “extra” to pay off other things and not be slaves to the credit card industry. We are very relieved, and while the new equity loan means we will be “paying for our house” for more years, that is a much more stable kind of debt to owe than credit cards are.</p>
<p>sounds like an excellent plan, congrats! Especially congrats that you have enough equity in your home to qualify for a home equity loan.</p>