There are companies that claim to help you pay your debt for you as you pay them a monthly portion of the bills (from credit cards), which may have high interest rates. Is it better to borrow from them to pay these off, or from your credit union to pay them off? What is the advantage of each?
bdancer222
Collection agencies don't do loans. I suspect you are referring to some kind of debt settlement company. Or some company that is offering you a credit card to pay off defaulted debt. RUN AWAY!! Either one is a very bad idea.
If this is defaulted credit cards that have been charged off and sent to collections, paying will not improve your credit/score. You may as well negotiate settlement for as little as you can. You should be able to settle for 25% to 50% in a lump sum. Forget any payment plan. Better to save up for a lump sum offer. Get any settlement agreement in writing and do not give the colllection agency direct access to your bank account.
If these credit cards are still open active accounts that you are having problems keeping up with, check with a NFCC credit counseling service: http://www.nfcc.org/. These are legit, non-profit companies that offer debt management programs for a nominal fee. They negotiate lower interest and payments so that you can pay off the debts. When you complete the program, you will have decent credit.
Taking out a loan to pay off credit card debt, even thru a credit union, might be a problem in qualifying for such a loan. If your credit is good enough and you get a lower interest rate, it could be a good idea .... provided you are disciplined enough to NOT run the credit cards back up.
El_Nimo
Before you do anything, you should ask yourself this question, "How did I get to all this debt? If I pay off all this debt will I do it again?"
If you can't figure out how you amassed all this debt then it's going to be a vicious cycle. You pay it off and then end up right back where you were again. You'll need to figure out is it because you have an expensive shopping habit. Is it medical bills, or just plain old living beyond your means.
If you are truly wanting to pay off your bill, I would recommend borrowing the money from the credit union and then pay off all your credit cards and start cutting them up save for one for emergency.
StephenWeinstein
The disadvantage of the companies is that they don't do what they claim. You're wasting money by paying it to them, because they don't pay off anything.
The advantage of the credit union is that they at least do lend you something, although you should check that the interest rate is really better.
?
Debt collection agencies don't lend you money.
A credit union is a good choice if you're pretty sure you'll be able to repay the loan. Otherwise, don't borrow. Perhaps consider a job (or second, or third job) instead.
Hope that helps.
Anonymous
If these debts are not that old, you are better off with a credit union if they approve you for the loans. If they are 5 years or older and it is pastthe SOL, you do not have to pay back a dime since they can not sue you