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Clean Slate Podcast – Episode 7
In episode 7 of the Clean Slate Podcast, Wayne and Juan discuss debt consolidation and what your best options are.
About the Speaker:
Juan Valladares is the Vice President of CreditGuard of America, Inc. and has been working in the credit counseling industry since 1997.
Juan began his career at a major answering service center, responsible for the training and supervision of over two hundred employees. Now in charge of managing CreditGuard’s counseling department, Juan’s management, organizational and motivational skills are all vital to the company’s success.
Juan is a devoted father of two and a passionate racquetball player who competes regularly to satisfy his competitive instincts. He has dedicated his professional life to helping people get out – and stay out – of debt.
“Clean Slate” Podcast Episode 7: Does Debt Consolidation Hurt Your Credit Score?
Wayne: A lot of the emotion, a lot of the stress, and the perception of lack of control really seems like, is based on our perception of how it will affect, say, a credit score, or our future credit opportunities. You had mentioned a wedding and getting a home and building a family. Does CreditGuard, or debt consolidation in general, negatively affect someone’s credit score?
Juan: CreditGuard is extremely careful to evaluate a consumer situation before we determine what the best course of action would be. Again, we gather the information, we find out where you are with your expenses or monthly payments: are you behind with your monthly payments, are you making way over the minimum payments and just looking to see how the payments you’re making can effectively get you out of debt faster and help maintain that good credit that you may have, or are you in default, where your credit is already in a bad situation?
So, our perspective, from at least a debt management plan, is that a person with great credit who’s paying their bills in a timely matter simply wouldn’t be put in our debt management plan.
We just overall look at their finances, make sure they are in a good situation, and go from there. Now for people who are current, we do have products for managing their services; it doesn’t negatively affect the credit report because it just continues to manage their money.
Juan: We set them up on a payment plan that is going to get them out of debt in a much faster period of time, saving them thousands of dollars in interest. When you save money in interest you’re actually making income. I know that that seems kind of weird, but you know if you’re paying $5,000 in interest on a $10,000 credit card debt over, let’s say, ten years, and I’m able to cut that down to $1,000 because of the way we manage the finances you just saved $4,000! And how much is $4,000? How many hours do you have to work to make $4,000? You might as well not give it away to finance charges.
Wayne: (Laughing) A lot of hours.
Juan: (Laughing) Exactly!
Wayne: A lot of hours.
Juan: So you know for people who are current, we just get them in the program. Their credit remains good, it actually helps them get out of debt faster and we get them up in a payment plan that’s affordable for them. But for people who are behind, missing payments, they’re already negatively affecting their credit report.
Now with our debt management program have plenty of benefits. Like I had mentioned before, number one: we’re going lower the interest rates, so your money now is more effective towards the actual principle that you owe. Secondly, we’re going to stop any late fees, stop any over-the-limit penalties with the creditors that they’re putting into services. In addition to that, we’re going to re-age the account, which as I mentioned before is to mark those accounts as current once again, and then get them into an affordable payment plan that they should be able to make on a monthly basis. And by the way, it’s only one payment! One payment a month to take care of all of their finances.
“Our debt management plan is not here to destroy, or even hurt your credit in any way; it’s here to help you have better buying power for the future, help you better manage your credit, better manage your finances, because essentially you don’t want to have bad credit.”
So then this way it’s much easier to manage than ‘Oh which payment do I have to make this week? Am I behind? Did I forget?’ So with the individual that has already negatively affected their credit report we kind of just get them back on track. We essentially call it the ‘fast track’. So managing their finances will help improve and have a positive effect on their credit scores. So, really, our debt management plan is not here to destroy, or even hurt your credit in any way; it’s here to help you have better buying power for the future, help you better manage your credit, better manage your finances, because essentially you don’t want to have bad credit.
If you have bad credit and you go buy a car, they’re charging you 20% interest rates, and that’s something that we are trying to avoid here, and we educate people on how to manage this even after they are out of the program.
It takes them approximately five years to get everything paid off, depending on how much they owe, but it doesn’t stop there just because we helped them out of debt . . . it continues for the rest of their lives; for any new debts they may have, we help them make sure that it’s not going to affect them in the future with their credit. So debt management plans really, at the end of the day, help you maintain good credit overall.
Wayne: It’s not one size fits all, really you’re talking about individualized, case-by-case basis, custom-fit solutions so that’s pretty incredible that you’re able to do it that way.
Juan: Yeah, we’ve been doing this for a very, very long time. And again, every single call that comes in is a specialized person. Our counselors are not on multiple phone calls–they get a phone call or a person who walks in and it’s one-on-one, and that’s it. So we have to look at those individuals, you know there’s a lot of common themes: we all have credit card debt, we have mortgages, we have car loans stuff like that, but really at the end of the day it’s what that individual feels comfortable with, what they are able to manage on their own, what their future goals are, that we take into consideration to determine the best possible course of action when it comes to their finances.
Wayne: There are so many variables that it couldn’t possibly be managed with one size fits all and be successful for the majority of the people.
Wondering if our services might be a good fit? Call 1-800-500-6489 or visit our Debt Solutions page for more information on how we can help you get out of debt. The call and initial consolation are free, so what are you waiting for?