interested in debt consolidation but dont know where to start?
Jul 03, 2009 in
Credit
zarayray10
i am interested in having my monthly credit card payments put into one payment per month. i was very close to trying this but backed out at the last minute out of fear of being screwed over by a debt consolidation company. can someone explain how these companies work? has anyone ever used one? is it helpful?
do u pay the debt consolidation company a seperate fee? or do they include that within ur consolidated payment?
i am interested in having my monthly credit card payments put into one payment per month. i was very close to trying this but backed out at the last minute out of fear of being screwed over by a debt consolidation company. can someone explain how these companies work? has anyone ever used one? is it helpful?
do u pay the debt consolidation company a seperate fee? or do they include that within ur consolidated payment?
Like this post? Subscribe to my RSS feed and get loads more!
3 comments
sweetbjbj on July 6, 2009 at 7:51 am
Debt consolidation is the bad things. It will be hard for you to get check again. Call the credit companies, this is the best time because they wanted what they can get. look on line for example of debt settlement letters. Next get the balance on the accounts and make a offer to them and set up the settlement payment. that looks better. Start with one card at a time.
KP*Due 1*6*09 With Abigail Mae!! on July 6, 2009 at 1:18 pm
My husband and I are having money issues and are in way over our head in cc bills thanks to a wedding and buying a house.. We looked into debt consolidation but found out that you have to pay them a lot of money to consolidate your debt, and its worse on your credit than filing bankruptcy. Besides it always on your record where if you file Bankrupt you only have to have it on your credit for 7 years.. My SIL filed bankruptcy about 4 years ago and bought a house last year and has no problems getting loans because she found simple ways to get her credit back up after filing bankruptcy.. Not rooting for bankruptcy here but don’t be fooled by the way it sounds.. Debt consolidation companies literally screw you financially (which is why you are there in the first place so it doesn’t help but only make things worse) and its worse on your overall credit. best of luck!
Debt Guru on July 8, 2009 at 1:38 am
Make sure you know what program you are getting into, debt consolidation comes in many forms and most of the time, folks get it confused with being just a loan. There are a variety of forms of debt consolidation, so you can certainly find an option that will work for you.
Since debt consolidation services come in many forms, it is important that each consumer reflects on what their needs and concerns and financial situation is before signing up for a debt consolidation service program. The four primary concerns for most consumers are: i) monthly payment, ii) time to debt freedom, iii) total cost, and iv) the credit rating impact of the consolidation program. Be sure to evaluate each program, relative to your prioritization of these factors.
It is important to fully understand each option and then pick the solution that is right for you.
Credit Counseling
Credit counseling, or signing up for a debt management plan, is a very common form of online debt consolidation. There are many companies offering online credit counseling, which is essentially a way to make one payment directly to the credit counseling agency, which then distributes that payment to your creditors. Most times, a credit counseling agency will be able to lower your monthly payments by getting interest rate concessions from your lenders or creditors. It is important to understand that in a credit counseling program, you are still repaying 100% of your debts – but with lower monthly payments. On average, most online credit counseling programs take around five years. While most credit counseling programs do not impact your FICO score, being enrolled in a credit counseling debt management plan DOES show up on your credit report… and, unfortunately, many lenders look at enrollment in credit counseling akin to filing for Chapter 13 Bankruptcy – or using a third party to re-organize your debts.
Debt Settlement
Debt settlement, also called debt negotiation, is a form of online debt consolidation that cuts your total debt, sometimes over 50%, with lower monthly payments. Debt settlement programs typically run around three years. It is important to keep in mind, however, that during the life of your debt settlement program, you are NOT paying your creditors. This means that a debt settlement solution of online debt consolidation will negatively impact your credit rating. Your credit rating will not be good, at a minimum, for the term of your debt settlement program. However, debt settlement is usually the fastest and cheapest way to debt freedom, with a low monthly payment, while avoiding Chapter 7 Bankruptcy. The trade-off here is a negative credit rating versus saving money.
Net-net: while there are many forms of debt consolidation services, many people with good to perfect credit who own homes should look into debt consolidation loans, while consumers with high credit card debt and poor credit may want to explore debt settlement or debt negotiation. However, each consumer is different, so find the online debt consolidation option that fits for you.