Free Debt Consolidation Assistance
Today more than ever people on TV, Radio, and the internet are advertising debt consolidation, but what is it really? Does it really work? How can I avoid being scammed out of house and home? Will it affect my credit? All these are very important questions that need to be addressed when seeking debt consolidation assistance.
Consolidation does not get rid of existing debt. Most often it is credit cards, retail credit, student debts and car loans that end up being consolidated. People use it to roll their smaller payments into one large payment and they often extend the life off the loan to lower monthly payments. The most practical type of debt consolidation program rolls existing debts into a home mortgage or HE-LOC loan on your house. In a sense, you are just borrowing money from one lender to pay off another. The main purpose of debt consolidation is to lower your monthly payments. It is important to note that even at a lower interest rate, you may still be paying more interest over the life of the loan if the loan is for a significantly longer period of time.
Beware of people who tell you that you can settle your debts for a fraction of what you owe. If you are not already behind on payments this will often only work by ruining your credit . If you are behind, you can probably settle a lot of this debt yourself with out paying a 3rd party commission. If you own assets or have an income there is nothing to stop the credit card companies for suing you after the settlement for the amount you originally owed. Another thing to avoid is brokers trying to consolidate your debt into an adjustable rate mortgages with a balloon payment due in 1, 3, or 5 years. Brokers can make a hefty kickback on these loans because the true payment amounts can be masked behind the arm.
Getting debt consolidation assistance is a serious step. At best it is only a temporary fix to a bigger problem. You should find out as much as you can about debt consolidation companies before proceeding.
S. Arnold, MBA has studied finance for several years. He offers FREE Debt Consolidation Assistance
Debt Consolidation FAQ:
Question: What is the best debt consolidation program around?
I am $30,000 in debt with high %rates and $1000 a month minimum payments. Any ideas for consolidation program?
Answer: A debt consolidation company doesn’t do anything for you that you can’t do for yourself. They are just a little more practised at bargaining, and will take a small percentage of your money for their efforts.
Basically all they do is contact your creditors, and guarantee them that they will get, say, 50% of the money they are owed if they forgive the other half. Then the consolidator tells you the wonderful news that you only have to pay 53% percent of your original debt. You’re happy that your debt has been slashed, and they are happy taking that 3% for themselves.
You could easily just call the creditor yourself and offer the same deal, and offer to cut out the middleman. If you do go with a consolidator, try to find a non-profit organization that doesn’t have a financial interest in your payments. American Consumer Credit Counseling is pretty well-known.
Question: Do Those Debt Consolidation Companies Really Work Or Are They A Scam?
I was thinking about consolidating my debt and wondered if anybody had a good experience with one.
Answer: Biggest problem with debt consolidation is you are only shifting your debt to a new loan. The interest rate might be lower but the time is stretched out and you end up paying more in interest by the time you finally get the loan paid off. Many people run the credit cards back up and then have the big loan payment and the credit cards to pay.
Credit counseling is definitely a better way to go. Check for a NFCC member in your area. These are legit, non-profit companies that offer debt management programs for a nominal fee. They don’t settle your debts. The negotiate lower interest and payments so you can pay off your debts.
Absolutely avoid debt settlement companies. Most are pure scams. At best they will trash your credit and get sued by your credit card companies.
Question: Which is best—debt consolidation or chapter 13?
I have about 13K in unsecured debt. I need either debt consolidation or chapter 13. Which is best and how do you recommend?
Answer: Filing for bankruptcy over $13,000 would be, in my opinion, an unwise move.
You would be best to figure out how to pay off the debt the cheapest and fastest way possible while doing as little damage to your credit score as possible.
You mentioned debt consolidation as an option. The term debt consolidation can be a confusing one. Many people think it is a loan to pay off your existing debts. This is not the case. When you hire a debt consolidation company they will in turn try and negotiate lower interest rates with your creditors and act as a buffer between you and those same creditors. You make one “consolidated” payment to this company each month and they make the payments to your creditors on your behalf.
Another option, (and if you are considering bankruptcy this option may work for you), is debt negotiation. Debt negotiation or debt settlement as it is also known, differs from debt consolidation in that the actual amount of debt that you owe is reduced, not just the interest rate.
Question: I need a good debt consolidation company. Any ideas?
I have several personal loans out. My monthly payments add up to about 800 a month, I only make a 1000. I’m not behind on payments but I cant keep up much longer. I cant seem to get any local banks to even listen to me.
Answer: Debt consolidation is an option, and you should look into it. Just be careful about WHAT you’re getting into. Some plans, because of their higher APR rates get you into more trouble than you were.
Also, some lenders look poorly upon it later on. Some institutions believe that it really is a black mark. It will depend upon the types of deals that your particular company or lender work out, and of course, your own individual circumstance. For some with absolutely NO way out, debt consolidation is a welcome option.
Take a good hard look at all the options and plans offered, and don’t let a single company pressure you into something you just can’t do. Make sure that you’re comfortable with the plan offered before you commit to it.
In any case, it doesn’t hurt to investigate debt consolidation as an option. It doesn’t cost you anything to find out more information about it.
Question: Will a debt Debt Consolidation pay off your child support?
I know how a debt consolidation company works and once they pay off my debt I pay them back in monthly payments. But do they help/offer helping you pay off your child support debt and student loans?
Answer: No. They won’t pay off anything. They just contact your credit card companies and ask them to reduce your interest rates. They combine all of the credit card debts together, add up how much the total monthly payments are and you still pay them off just as you always have. You only have one large payment now. If you contact the right kind of credit service (one that is non-profit) you are better off. The only way to pay your child support is to make regular payments on it.
Question: Does Debt Consolidation Free up My Credit Cards?
If a Debt Consolidation Company takes over my credit card debt does that then free up my credit cards? Or do my credit card companies cancel all the cards immediately?
I actually intend to stop using the cards, but just in case I need them, will they be at zero balance once the Debt Consolidation Company comes in?
Answer: It depends on what you are calling a debt consolidation company.
Normally, debt consolidation is a big loan that pays off all the small debts. You then have a fixed payment amount for a specific number of payments. Problem with debt consolidation is that many people run the credit card debt back up and end up with the big loan payment and the credit cards to pay.
If you are referring to a debt management program where you send money to a credit counseling service who pays the individual debts, you usually have to agree to stop using all credit cards. In some cases the credit card companies will close your account.
The credit counseling service negotiates lower interest and payments so that you can pay off your debts. If you opt for credit counseling, be sure to use a NFCC member. These are legit, non-profit companies.
Question: How can a debt consolidation loan that also includes home repairs and will reduce monthly costs by $650 be bad?
I checked out the loan and the interest is not too bad giving that this is a second mortgage that gives money for repairs and pay offs. The only thing I see is that it eats up all the equity and we will need to live in our home for at least 15 years before trying to sell…so that alone is the biggest decision. I am just wondering if there is anything else I should be looking for?
Answer: Is it an adjustable rate? That could be very bad. Additionally, what is the rate? Is it very high (2 Percentage points above the national average), if it is you are paying too much. Are there any loan costs, how much are they? More than say 2 percent of the loan? Is it a 15 year prepayment clause? Can you not prepay it for 15 years at all? That is bad as you may want to move.
There is a lot to consider. Your equity will increase because house values increase with time, but an adjustable rate mtge is a killer. Also, if the rate is to high, shop around, you may do better. Try getting a loan directly from the bank. They are usually cheaper than a broker, and they tell you a lot more about your eligibility, credit scores etc.
Question: Does anyone know of a lender willing to help with debt consolidation for poor credit?
I have been working very hard to improve my credit score and have had to make several personal loans to do so. Now I have a lot of different payments with high interest rates. I would much rather have one payment with one interest rate.
Answer: The type of loan you wanted is poor credit consolidation loan. Since you have a poor credit forget getting this debt consolidation loan from a bank. You have to try private lenders and credit union. With so many lenders and loaners and scams it is so frustrating to select one that can really suite your need. But you can get this done from the comfort of your home. That is to search online. Visit the lenders website, do some research and apply online when you are satisfied.