| SolveYourProblem.com
Article Series: Debt
Relief & Debt Consolidation
I Want To Get Rid
Of My Debt...NOW!
How
To Find the Right Debt Consolidation Company
If
you are either drowning in debt, or realizing that you are
awfully close to falling behind in your bills,
then a debt consolidation company may have the answers for
you. It is important to remember that debt consolidation
is not the same as a debt consolidation loan. The latter usually
refers to an unsecured loan from a bank or other lender. You
receive the funds from your lender, and in turn pay off your
debts. In the end, you only owe your new lender for the loan.
A debt consolidation company, on the other hand, will not
offer you a loan. Instead the company will work with your unsecured
lenders, such as credit card companies, to renegotiate
the terms of your repayment. Very often this will result in a reduced
interest, and also a reduction in fees – especially if you
are already behind on your payments and have incurred late
payment fees. While the debt consolidation company takes over
the aspect of negotiating with your creditors, you will make
one monthly payment to the company, which will then disburse
the funds to the individual lenders.
Unfortunately, there are some companies out there who are
in business for themselves, and their goal is not to help you
out of your debt, but to help themselves to every penny they
can squeeze out of you. For this reason it is advisable
to shop around for debt consolidation companies, and compare the
things they will do for you. Here is a helpful guide to finding
the right debt consolidation company for you:
When you are shopping around on the Internet for debt consolidation
companies, you should stay away from websites that do not give
you a full understanding of the process before asking you to
provide them with personal information, such as social security
numbers, credit card numbers and other items.
The
consolidation company of your choice should take the legwork
out of the process for you. In other words, a company representative
should be assigned to your particular case who will make the
phone calls to your creditors for you, and whom you can call
with questions or for a status report.
The company should offer counseling, newsletters, or other
material that will help you stay on the right track and prevent
you from slipping back into bad habits. Some companies actually
offer web seminars to their clients for little or no fees to
help them stay on track.
Beware
of companies that promise you to repair your credit. This is not possible since the only thing that will fix damaged
credit is the responsible use thereof. In other words, if you
have late payments on your record, they will most likely not
get expunged, but will be followed by positive notations once
you make your payments on time. Similarly, stay on companies
that promise you that every creditor will lower their rates.
There are actually some creditors out there that will not work
with a debt consolidation company at all, and while you can
still pay them through the company, you will not see any change
in payments due, interest rates, or fees.
Ideally,
you should be out of debt within about 48 months.
If your debt management company quotes you are significantly
higher timeframe, it is important to find out why.
It is important to not that some companies may require you
to cut up your cards, and promise not to apply for any more
credit while you are participating in their program.
Beware a company that asks you for high up-front fees “to
get the ball rolling” or to cover administrative costs. Similarly,
do not send in any money to the company until you have been
notified that all your creditors have accepted the new terms
of your payoff. Instead, continue to make minimum monthly payments
to your creditors.
As
you can see, not all debt consolidation companies are created
equal. As a matter of fact, while there are a good many of
them out there that will do the right thing and who are extremely
ethical, you also need to be aware that a few of them as less
than ethical. Do not despair! With a little bit of research
and some questions asked to the company, you will be able to
reduce that pile of bills that seems to have built up overnight.
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SolveYourProblem.com
: 2007
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