Considering Debt Consolidation Or Management
There are companies that offer services to help with consolidating your debt
, as well as companies that help with managing debt, there is a major different between these two debt strategies that should not be confused.
The first step one has to consider is which of the two routes would be the best option, or at the very least the right option. Debt consolidation is essentially combining all debts into one account to enable a single payment in reducing this lump sum. The management aspect pertains more to a re-organizing of debts, interest rates, payments and the monthly administration thereof. The process of debt consolidation can prove to be helpful if the interest rate that is secured in the process of consolidating actually reduces the monthly repayments, whilst not adding too much to the total amount that must be repaid.
Obviously there will be some sort of interest expense incurred, however due to the higher amount of banking and financing competition within the industry, you may be in a position to secure a a favourable interest rate which is worth considering. If you elect the debt consolidation route, you will realize that the temptation to spend outside of your debt plan may be quite strong, this is where you will have to exercise some discipline if you truly wish to accomplish your goal of getting rid of your debt. From a management perspective, this option is quite often exercised by people who are literally too busy to tend to their own affairs, or perhaps even lack the ability to manage their repayments on a monthly basis. Naturally these sort of services come at a premium and a monthly fee is payable for the services that these companies provide.
Often times there are upfront fees too, but options exist to pay these on a monthly basis. Debt management and debt consolidation quite often alleviate the communication hassles of dealing with creditors, which may prove to be quite time consuming. You may well have decided to have a closer look at your debt situation and therefore considering the options of either debt consolidation or management would be a route forward for you, the following steps may determine your success in this area.
The selection of the right company or partner in this debt process will be key to realizing your goals here. Testimonials from past and present customers of the identified service providers will be one of the key motivators in selecting any specific partner here. The debt management and debt consolidation industry has had some shady characters participate therein and therefore one needs to be selective in choosing the right provider. An open relationship should be forthcoming in dealing with your financial affairs as well as a proven record on the part of the service provider chosen.
If you have selected a debt consolidation plan, make sure you take the time to understand the exact implications of the entire process, including amounts repaid, conditions of any loans as well as any settlement issues where applicable. Do not limit yourself to a single provider or option but rather shop around before making a commitment within this process.
By obtaining different quotes whether from a management or debt consolidation basis you will be able to compare apples with appeals and make an informed decision about your affairs and the route forward. Stay in the know and up to date regarding your financial affairs as any errors or miscommunications, which may well occur, can have significant impact upon your credit and financial standing.
by: Chris Kennelly
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