Tony answers:

A lot of these debt consolidation/repair companies are scams. They take their fees up front and then trash your credit. One of the tactics is to not pay you bills for several months, then offer partial payment to settle the account under threat of filing backruptcy.

Some creditors will just take you to court and get a judgment. In any case, your credit will be trashed worse than a bankruptcy.

If you need help putting together a budget, check out Consumer Credit Counseling Services (CCCS), a non-profit company offering free counseling. http://www.nfcc.org/

It is better to just pay off your debts yourself. Make a strict budget. Eliminate the extras — cell phone, eating out, new clothes, etc. Put every penny you can squeeze out of that budget on the highest interest debt, while making minimum payments on the rest. When the highest rate is paid off, move to the next till all your debts are paid off.

If you work at it you can do it in 2 or 3 years. You will end up with a good payment history in addition to getting out of debt.

Tony answers:

These type of companies will in the long run cost you more then you know. As to Persels and Associates LLC, they are just a subsidiary of Care One Credit.

They make you pay funds into an escrow account first (minus their monthly fees) then inform your creditors that they would like to offer a settlement. They however wait forever to do so, once the creditor has waited long enough, they may take the offer. But remember this, no creditor is obligated to accepting their offer and could wait a few years and just before your state statutes of limitations runs out for bringing a civil suit to seek a judgment expires, they will hit you with a law suit.

Ask them to provide you with a monthly statement to see where you stand with your creditors.

As to your credit rating, well all of your credit reports have now been flagged as being in settlement which will affect your score in a very negative manner.

You might want to read about them from a person who filed a complaint at this following web site:

http://www.ripoffreport.com/reports/0/354/RipOff0354186.htm

(NOTE: this web site might take a while to download)

Here are some “warning signs” to look for
The company wants you to pay for credit repair services before they provide any services. Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the services they have promised.
The company doesn’t tell you your rights and what you can do for yourself for free.
The company recommends that you do not contact any of the three major national credit reporting companies directly.
The company tells you they can get rid of most or all the negative credit information in your credit report, even if that information is accurate and current.
The company suggests that you try to invent a “new” credit identity — and then, a new credit report — by applying for an Employer Identification Number to use instead of your Social Security number.
The company advises you to dispute all the information in your credit report, regardless of its accuracy or timeliness.

Other then this, I can not personaly state that they are not legitimate, but one should allways be wary. Remember, if it sounds to good to be true, then it isn’t.

EDIT: NOT all links provided are SPAM, only those that lead to pay for services web site.

Hope this answer is of help to you
LEGAL DISCLAIMER: The answer provided here is intended for informational purposes only. It is not intended nor presumed to be legal counsel or professional legal advice

Tony answers:

Debt management programs are for people who can no longer make payments on their cards, and is used as a last step toward bankruptcy. People usually come to these programs when they are severly behind in payments. Generally, this helps peoples credit as it brings them current. However, since you were already current it could have the opposite effect.

It sounds like you just wanted a quick fix, which a debt management program is not. One requirement of these programs is that all your accounts will be closed. You probably can get off of the program, but it would be up to each credit card company if they will re-open your account.

If you can not get the accounts reopened then I would actually just stay on the program and pay them off as soon as possible. You have a lower interest rate and since most of the damage is already done.

It’s a bit late for this piece of advice for this case, but you should NEVER sign up or apply for anything without first reading about the program and/or company. Because you did not take the time to find out exactly what happens you did not get the result you wanted. This is not only for Credit but just about everything else in your daily life.

Tony answers:

I have not heard of Care One, but I did try using a credit counseling / debt consolidation company once and I got screwed. These companies only pay when you pay, so they can mess you up even more then you already are. They paid late every time with me, even when I paid on time, and it turned my credit bad even faster.

What I would recommend is simply to do talk to the creditors yourself. Let them know you are having problems and ask them if they can work with you. A lot of them will freeze your account, cut your interest and work out monthly payments. Some will even take a settlement payment for 60% less then you owe (if you are already behind). I did this and was able to pay off all my credit in two years…and I owed well over $10K making $8/hr. Just give them a call and don’t let them intimidate you. They can’t get you fired, and they can’t take anything away from you. That’s just an empty threat to scare you into paying.

Hope this helps.

Tony answers:

Practically any type of loan can be wrapped into the debt consolidation process. Common types include finance charges, late fees and overdraft charges, credit cards, personal loans, utility bills, medical bills, car loans, store cards, gas cards and back taxes. A debt consolidation loanold loans are replaced with a new one that has more favorable terms. Your loan consultant will negotiate with creditors on your behalf, so you’ll no longer have to deal with harassing phone calls and daily mail.

Tony answers:

I have been told that banks look at Debt Consolidation Loans as a bankruptcy. They feel that you can not handle your debt alone so you are a big risk. Pick one debt to concentrate on to pay it off. The two different methods are to either pick the highest interest debt or the lowest debt amount. Once you paid off that debt then concentrate on the next debt until it is paid off.

Tony answers:

Try a local non-profit credit counseling service. Their fees are minimal and they will offer some education in money management as well.

Avoid trying to do anything like this online. Scams abound and you will end up worse rather than better.

Meanwhile, consider getting a second job to help you pay off this debt so you can make a new start.

Tony answers:

Don’t know what planet lika is from, but you do not need to own a home to get a consolidation loan. She’s confusing it with a home equity loan.

You can go to a bank or credit union and get a consolidation loan just like a personal loan. It may be difficult if you have poor credit, but it’s done all the time. I did it, a few friends did it, so ignore Lika’s answer.

Pay attention to VaTreasures’ answer! One of the biggest mistakes people make is to get a consolidation loan (or transfer balances to other cards) is to not control their credit. Too many times people consolidate, then turn around and run their now-empty cards right back up again. Now you are in twice the amount of debt, and end up filing for bankruptcy.

Many thousands of people were forced into bankruptcy last year for this very reason! Credit Card Transfers and Consolidation loans were being pushed like crazy as a quick and easy way out of debt, but people didn’t see the dangers! You MUST quit using credit until you have paid off your loan.