Debt Consolidation
What exactly is debt consolidation? It is a process of taking all the various loans and debts you have and analyzing them with the goal of arriving at one payment plan where the low monthly payment is able to pay them off in the best order. Consolidation should address all your debt obligations. . not just credit cards and personal loans but also medical bills and any other payment you owe to someone else.
In the simplest of debt consolidation programs, no new loan is entered into. Rather, an experienced debt consolidator is only serving as a financial analyst and counselor. She will review the terms of all of your debt and create the best plan for you.
In some cases, debt consolidation may involve paying off your existing debt and loans and rolling them all into one new loan. This makes sense in theory but you need to be sure you are not going to be worse off by having to put more security up for your loan or ending up paying more in fees and loan closing costs.
In some cases, debt consolidation may involve debt settlement and negotiation. Your debt consolidation specialist in this case will contact your creditors and lenders and negotiate to reduce balances, monthly payments and interest rates.
The primary goal of debt consolidation when it works is to get you to a point where you are able to pay one payment and still meet your debt obligations. Secondary goals include getting debt collectors to stop harassing you and eventually getting rid of all your debt.
When looking for a debt consolidation company, you need to be aware that there are many scams and incompetent businesses out there that wil make promises, require upfront fees and yet have no expertise to really help you.
TIPS WHEN LOOKING FOR A REPUTABLE DEBT CONSOLIDATION SERVICES COMPANY:
- They must have a live person and customer service to speak to when shopping around.
- Their program must involve assigning a dedicated debt consolidation person to your account. . . someone you can always reach by phone.
- The best companies have certifications both for their business (like the Better Business Bureau and it helps if the business is licensed and bonded) and for their consultants.
- You want to only deal with a company that has experience and so have more than 10 years of helping debtors with debt consolidation.
- The company should be comfortable telling you upfront what costs and fees are involved. Always shop around to compare fees.
- The debt consolidation company should also be able to tell you upfront exactly what they are going to do for you and what the end goals are to solve your debt problems.
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