If you have seen advertising about debt
consolidation
companies, you might be under the mistaken notion that they can do no
wrong. Can they really consolidate all your debts and give you a
favorable interest rate as low as 0%? Sometimes, yes. However this is
seldom the case, and many unsuspecting customers have found themselves
victims of unscrupulous consolidation companies.
If you have
mountains of debt, it is very appealing to consolidate them to become
'debt free.' Unfortunately many people are so desperate to do this that
they do look closely enough at their consolidation agreement. Though
certainly not always so, the interest rate you pay for consolidating
your debts can actually be higher than you would be paying your
creditors separately. On top of that, most companies also charge a
separate fee for their services. In that scenario, your debts are being
paid off a lot more slowly than you may realize.
What most people
are unaware of is that consolidation companies don't do anything
different from what you could do yourself if you know the right
information and are inclined to do the leg work. For example, you have
every right to speak with your creditors and come to a compromise with
them. If you take the time to explain your situation to your creditors,
they are usually willing to be flexible with you - as long as you
demonstrate good faith in repaying. Most creditors prefer dealing
directly with the debtor, anyway, since it cuts out the middleman.
Another
thing you may not be know is that some consolidation companies make
late payments to creditors. This adds costs for which the customer is
responsible but likely is not aware; and this will only serve to extend
the repayment period.
Using a balance transfer on your credit
cards is also an additional option you may assume is more efficient and
less expensive in paying off your debts. However the initial low
interest rate on almost any new credit card does not last, and the
customer who does not stay on top of payment records may in fact wind
up paying back much more in the end. Also, if you frequently switch
cards, you could find that you are no longer accepted for new credit
cards.
If you are still considering a consolidation
of your
debts, borrowing against the equity in your home is an option. It's a
very serious option, but an option nonetheless. Such loans typically
have a lower interest rate than consolidation companies offer so are
worth consideration. If you have previously enjoyed a good credit
rating, weigh the possibility of obtaining a personal loan.
There
are other options you can investigate if you need help in dealing with
your debts. Debt counselors can assist without resorting to the use of
a consolidation company. They can talk you through options available to
you and provide insightful guidance. The bottom line is that if you
take the time to gain all available information you can about your
debts and speak with your creditors forthrightly, you can almost always
come to a mutually beneficial solution.
Credit Repair & Debt Collections
Help For Consumers. A Self Help Strategy To Deal With Credit Issues And
Collection Problems.
