a bit over a year ago, I went through debt consolidation. I signed up with a company that offers me a monthly payment to kill my credit cards and provide me legal representation should I need it. It’s been about a year since and they have only shut down some of them. There are 1 or 2 still left open.

I was told not to make any payments on the cards. Let them complain and threaten with collections. This will let the debt consolidators buy the debt for cheap if the credit card companies refuse to close the cards. They have been tanking my credit for months and they aren’t closing my cards.

Now I’m in a bad place financially. I lost the job I had at the time I went into consolidation and the current one isn’t paying as much. I’m not missing any payments but it’s trapping me.

I may need to leave my state for some place safer soon. But I have such a poor credit score now that I cant imagine anyone renting to me now.

Debt consolidation feels like it was a scam.

Should I declare bankruptcy and start over?

  • Otherbarry@lemmy.frozeninferno.xyzEnglish
    0·
    4 days ago

    Debt consolidation feels like it was a scam.

    Sounds like it, whatever that was that you signed up for does not sound like anything people recommend doing. If anything you could try doing promotional balance transfers onto a lower interest rate credit card if it gives you say 12-24 months 0 interest rate - that strategy is only temporary to give you some more time to pay things off.

    When struggling with multiple credit card balances you essentially need to decide how you want to pay them off (debt avalanche vs snowball method) e.g. pay the minimum on all the cards except one of them, that one you pay as much as you can until it is paid off, then keep repeating until you’re done with all the cards.

    https://www.creditkarma.com/advice/i/debt-avalanche

    or

    https://www.creditkarma.com/advice/i/what-is-the-snowball-method

    And in the meantime obvs stop using them until it’s all paid off.

    But I have such a poor credit score now that I cant imagine anyone renting to me now.

    Yeah that might be tough. Maybe living with roommates or temporary prepaid subletting is an option? Those sort of arrangements are less likely to run credit checks.

    • ShepherdPie@midwest.socialEnglish
      0·
      4 days ago

      If anything you could try doing promotional balance transfers onto a lower interest rate credit card if it gives you say 12-24 months 0 interest rate -

      Just be aware that if you don’t pay off the entire balance by the end of the 12-24 month period that they will hit you with the entirety of the back interest starting from day 1, plus you have to pay fees to do a balance transfer so this is probably not an option in OP’s case.