Question:

Dear Steve,

My question concerns Debt consolidation. I contacted Titan Financial Group after receiving a letter from them. When I called they offered something called debt collateralization. On $19,027 consolidation I was offered a plan of 365 a month for 36 months on 3 credit cards. I met and signed paperwork Saturday April 4, 2020. I was surprised when one of the forms was a “limited power of attorney.” Giving them the authority to negotiate on my behalf.

I was even more concerned when after going thru 30 pages of documents I was not given a copy of what I had just signed. I was given a form that gives me the right to cancel after 5 days. With Lakeview Law Group PLLC New York, NY. I will be sending them a certified, letter that must be signed for via USPS on August 7, 2020

Now with all that said. I am interested in this Debt Consolidation you spoke of in your web post. Let me say that currently I am NOT behind on any payments and all my debt is up to date. I am taking this action because after 5 years with 2 cards and 2 years with another the first creditor raised my interest rate from 14.5% to 20.5%. The other reduced my credit line from 4500 to 3000 ALL because I might hypothetically default.

Although, I never pay the minimum due. It is always the minimum plus at least half the interest. But because of circumstances beyond my control I have to max out 2 of the 3 cards. This killed my debt service ratio. Do I negotiate with the lenders? How do I find out if I’m eligible for a debt consolidation loan?

Thank you.

Louise

Answer:

Dear Louise,

It sounds to me like they sold you some variation of a debt settlement program. Or at least some program where you default on your current debts and they attempt to resolve them in some way.

From what you described, that does not sound like what you are interested in at this time.

You mentioned you are maxed out on a couple of cards. That’s a clue that your financial struggles are ongoing.

Also, the fact that your credit card companies are raising your rates and lowering your limits is an indication you are of much higher risk and showing signs of financial instability.

In my opinion, there is enough going on here potentially that you should carefully evaluate all of your options before you leap for just one.

A debt consolidation loan might be a good idea but if you are having to max out cards it would be way too easy to get the loan and then run the cards up again. I know you say you won’t do that. But when faced with tough financial times, that’s just what almost always happens.

This is the time to take a closer look at your situation and not just from the solution point of view. The better path would be to determine what you can really afford to repay while saving some money in an emergency fund at the same time. You also need to consider how much it will cost you in lost retirement if you take years to deal with this.

You can look at my get out of debt calculator but it would be a horrible mistake for you to not also find a good local bankruptcy attorney and have a free discussion about what bankruptcy would mean for you. Bankruptcy is the fastest way to get a fresh start for the least amount of money.

Only then can you make the best decision for yourself instead of taking the advice of what is most likely a commissioned debt relief salesperson.

Big Hug!
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