O wise frugality mamas... debt consolidation question

[Penelope]

I am interested in consolidating my CC debt, probably via a nonprofit credit counseling service (I'm looking here http://www.consumercredit.com/ but would also be open to suggestions.)

Dh is, finally, on board. After a rocky period of unemployment for him, we're finally in a spot where I think we can make some real progress.

Questions for BTDT mamas: does your credit get harmed? This is dh's big question, I think. The CCC website above suggests that it might, but I'm not as worried about this as dh is, since good credit but unmanagable debt does not seem sustainable to me.

Also, anybody have a bad experience? Anybody have better suggestions? We're doing well living within our actual means, since the CC have no more room on them () and my parents have offered us some backup/emergency options. We'll also be building an emergency fund but have had a bunch of car repairs in the last two months which set us back.

Dh has been the person managing our money for several years now, and I'm not willing to leave it up to him any more, so it's a kind of tricky transition to be working on... I want to make sure we make good decisions.

[greenbeanmama]

This is quite personal experience, but friends of ours did that and thought they were good. But when they tried to buy a house, they found out there credit was completely ruined because of it. Their realtor told them that lenders view a credit card consolidation only slightly better than a bankruptcy. The sad thing for them was that they didn't even NEED to do it - they wanted to pay off a couple thousand faster, and they thought that consolidating was the best way to do so.

I'd think twice if I were you.

[MyTwoAs]

Ditto greenbeanmama - it does a doozy on your credit report/credit score (I used to work for a credit card company and have seen credit bureau reports of clients that went through CCCS). Have you looked at snowballing your debts instead?

[Penelope]

Hmm, that does not sound good.

I'm not sure what snowballing is?

[cristina47454]

We have 10s of thousand of dollars in cc debt. We chose snowballing. It will take us three years, but it would take us MUCH longer to rebuild our credit. Snowballing is when you pay the minimums on all cards but the one with highest interest (some attack the card with the lowest balance first just so they see more progress faster). You throw all extra at that one card. When it disappears, you take everything you were throwing at that card and throw it at the next one. You gain momentum pretty quickly! Their are some online calculators that will help you see how to set it up. GL!

[cristeen]

I agree with the pps - my sister did this and then discovered that her credit was ruined anyway, so she went ahead and filed bankruptcy.

You're far better off snowballing assuming you can manage at least the minimum payments on everything.

[Penelope]

This is super helpful. Thanks.

ATM, we can manage the minimums on everything, and once we get a bit of an emergency fund built up I think we can really focus on paying more than that. Part of the problem is that dh is forgetting payments, etc. and I need to take responsibility for managing our money, which is going to be a big shift for us and a bit of a struggle I think.

Ok, off to do some more reading, and I'm sure I'll be back with more questions.