Debt and income crisis

Bill has a lot debt, and little income, as he finds himself starting over financially in life. He asks about using a consolidation company, but Dave urges him to stay away from those types of things.

QUESTION: Bill is starting over after selling his company, then losing almost everything in real estate. He has a lot of debt, an income shortage, and his wife has medical issues. Recently, Bill received a call from a company promising it could negotiate the amount he owes to a lower figure, and get a zero-percent interest rate until everything was paid off. Dave warns him about using companies like this.

ANSWER: This is not a good idea. You’re looking at two major problems with a company such as this one. One, they will absolutely destroy whatever credit you may have. Their plan is to take your cash, and spend some time beating down the credit card companies until they agree to accept a lesser amount. Then, they use your cash to settle loans you will have defaulted on by then. This will put you in a situation very similar to if you had filed Chapter 13 bankruptcy. Stay away from these people.

You have an income crisis, in addition to a debt crisis, at this point. But you don’t need to be paying a consolidation company when you don’t even know how you’re going to eat. Let’s take care of the income situation first, and then go from there.