Can Debt Consolidation Help Me?
Start 2010 off the Right Way. Are you slowly sinking deeper into higher debt year after year? Now is the right time to start getting your finances under control. Start the year off debt consolidation and your monthly expenses could be reduced as much as 90%. There is no need for you to continue suffering when there is help available right now. You don't have to carry the overwhelming weight of high interest rates all by yourself. Debt consolidation is the solution to making your monthly expenses easier to manage. Paying off all your loans and credit card bills is something you can accomplish.
What is debt consolidation? Debt consolidation is a way of eliminating the heavy interest rates that have been haunting you and replacing them with a far more manageable single payment plan. Debt consolidation companies can do this because they negotiate directly with your creditors and get them to agree to sell your debt to them at a discounted rate. This means that you get a much smaller payment instead of several large ones each month. The debt consolidation companies do most of the work for you!
How does it work? Creditors are willing to go along with this because profit wise they are better off handing it over to a debt consolidation company then they are paying to continuously hound you for payments. It is easier on them and yourself when you hand it over to a professional to take care of it. Most creditors realize a reduce payment is better than no payment at all. One of the worst things you can do for your credit and the wellbeing of the creditors is to file bankruptcy and default on your loans. Because of that, creditors are willing to take a small hit on their profits rather than accumulate a big loss. Trying to negotiate with the creditors yourself can be like pulling teeth and may not be very effective at all. You are far more likely to get a better deal through a debt consolidation company because they have a proven history of working with the companies and are not afraid to pay it all off all at once and take payments from you over time. This way the creditor gets their money and you save your credit. This also gets those pesky calls from the creditors off your back.
How do you know if you qualify? Generally debt consolidation requires you to have a fairly high amount of debt. Usually people who apply for debt consolidation do so because they are in danger of bankruptcy. If you are not in the danger zone, it may not be worth it to the companies to get you a smaller rate of interest so you may not qualify for all their services. If the debt is slightly under what is required by the consolidators, some companies may still be able to help with the creditors although this is entirely at their discretion.
How can it help you? By having to pay just one significantly smaller payment each month, not only do you have extra money per month you also have the debt collectors off your back. It is easier to pay the debt collectors back so your overall credit will increase. With increased credit, future loans will be cheaper- whether you're looking to purchase a home or vehicle.
What you usually need to do. The first step is to gather all necessary papers pertaining to your lenders so that you will be able to quickly assist the consolidator. Write down how much you are paying each lender each month, interest rates and the amount of each debt you want to consolidate. Typically debt consolidation companies require some form of collateral in return for their services. Debt Consolidators are there to help, but they cannot do so unless they have collateral to fall back on should something go wrong. Items such as houses and automobiles are always great collateral. They will pay off your debts and hold something as collateral until you pay them back.
What are Pros? The biggest pro is that it can instantly improve your credit. It also gives you extra spending money each month since you have a smaller monthly payment. Debt consolidation can often save you from bankruptcy making. You can maintain your credit rating while combining multiple payments into just one.
What are the Cons? Should you fail to keep up with your debt consolidation it will hurt your credit. In some cases debt consolidation can make it more difficult if you must file bankruptcy. Since the actual debt has exchanged hands from your original creditors it may make it almost impossible to default on the loan.
How to spot a scam Debt consolidation scams will usually involve telemarketers pushing the service on you and will not take the word "no" for an answer. If you feel that they are putting you under a lot of pressure it is probably because they are trying to make a quota and need to make "the sale." Be careful. Remember that just because they might hide behind a non-profit status, it does not mean they won't be charging you fees or interest! Always ask for consolidation companies to send copies of the consolidation terms of agreement, list of interest rates and applicable fees before signing anything or agreeing to go through with their services. A scam may have you paying much more in the long run than you actually owe, so it is especially important to get the facts before making a decision. If you are concerned about a company's sincerity, check the Better Business Bureau for a list of reputable debt consolidators or to report a scam.
How great it will feel to know you are on track to success! Just think of how much better you will feel when the credit hounding stops. No more phone calls interrupting your home or professional life. Peace of mind will be yours knowing that you are finally on the right track towards a debt free future.
So start the year off right. Get a hold of your debt problems and have them taken care of today.
by: Louis Fabiano
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