Debt Consolidation as an Option for Debt Settlement
The most crucial thing you must do if you are under a seemingly insurmountable mountain of debt is to stop using credit. Destroy your credit cards and vow not to take on more debt until you have solved the problems you have right now. Settle what you can and then move on to the next option: debt consolidation.
Debt consolidation should be considered after you have done what you can personally do to take care of your debt. Not all debt consolidation is the same so you will need to be careful when choosing a consolidation company. If you own your own home and have paid a substantial amount on it, you may be able to get a home equity loan to cover your debts. These are tax deferrable and likely lower in interest than your individual debts.
If a home equity loan is not an option, start looking into other debt consolidation companies. A good consolidation company can talk to creditors and be successful at lowering interest rates and getting some of them to settle debt for a lower amount. They will either pay off the rest of your debt and then charge you one lower monthly payment plus a fee for their service or they will be the “go-between” that collects one payment from you and divides the money up amongst your creditors. The one payment includes their fee in this case.
To find a reputable debt consolidation company, use the internet to find consumer reports. The Better Business Bureau’s online site may have information on the companies you are considering. Read all the reviews and talk to other people who have used the company. Then, call the company and ask about their services. Make sure to ask them for detailed information on fees you will owe them and exactly which services they offer. A good company will often offer credit counseling. This kind of counseling can not only help you get out of debt but can help to keep you out of debt.
If you have done all you can and debt consolidation is not a viable option for you, then you might consider bankruptcy. Don’t go that far unless you have exhausted every other avenue. Debt consolidation can be a very good thing if you choose the company wisely.
September 16th, 2008 at 8:29 am
Debt consolidation companies provide qualified and experienced personnel to guide you. Those who have been struggling to pay monthly payments can hopefully obtain the help they need to get out of debt. Thanks for the article!