Bad Credit Debt Consolidation
Many residents in Florida and elsewhere are feeling the weight of unmanageable credit card debt and all types of unsecured debts and wondering if debt consolidation will help them end their bad credit debt problems. To make matters worse, throw in a couple of missing payments and you will likely end up with a bad credit score, which may cost you hundreds of thousands in dollars in extra interest and negatively impact the way you live your life.
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It's no surprise then that when lucrative offers from companies that promise to help consumers "cut your minimum monthly payments in half!" or "reduce your interest rates down to zero," more and more people willingly taking the bait. Such promises may sound so tempting that before you know it, you're dialing their toll-free number and inquiring about debt consolidation loans. But before you decide to consolidate your debts via a debt consolidation loan, make sure you understand the pros and cons.
When you take out a debt consolidation loan, you are hoping to, essentially, combine all your high-interest credit card bills into one, lower interest payment. Sounds pretty straightforward, right? But there are potential risks. For some people, taking a personal loan to consolidate multiple high-interest credit card bills into one lower payment can work in eventually reducing their debt. But for some, the likelihood is that they will eventually end up running up high-interest credit cards all over again. That's a pretty grim scenario when you consider that you now have high-interest credit card payments PLUS a debt consolidation loan. And, if you use your home as collateral to secure a loan, you may put your home at risk if you default on the terms of the loan.
Unlike simply taking out a loan, a debt management program (DMP) typically allows you to consolidate all your unsecured debts into one monthly payment that you make to a credit counseling agency. Acting on your behalf, a credit counselor will then distribute your monthly payment to your creditors based on the repayment plan that they have negotiated. In many cases, the monthly payment is significantly lower than what you are currently paying because the proposals made to creditors on your behalf normally involve reduced interest rates, and possibly the eliminating of fees and other penalties that may be on your account.
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Another potentially viable option is debt settlement, or what some may call debt negotiation. These days, an increasing number of companies are willing to discuss settlement options with consumers who are truly having a difficult time making their credit card payments. Under a debt settlement program, creditors may agree to forgive or settle debts for a considerably lower amount than what's owed. Clients who negotiate their debts are often advised to stop paying their bills and accumulate money that can be used to negotiate a one-time settlement fee. But remember, debt settlement is also not a 100 percent, no-strings-attached method. It will negatively impact your credit score (although not as severely as personal bankruptcy) and may result in your creditors sending you threatening letters or even suing you. And something else to think about -- debt settlement may have tax consequences, so be sure you know all the facts before you start negotiating your debts.
With all the risks and uncertainties involved with debt relief services, it's in your best interest to talk to experts who can help you find the right solution for your debt dilemma. We understand if you are hesitant to seek financial help and divulge such private information, but you may find it less overwhelming if you have someone on your side that's knowledgeable about all the debt reduction options available, whether it's a consolidation loan, debt management, debt settlement, or even bankruptcy. If you're in debt, the first thing to do is to budget carefully and control your spending -- but if things have gotten so far out of control that you need outside assistance, we can send you your free debt relief analysis and savings estimate at no obligation.
Request your free debt relief analysis and savings estimate in minutes. Start by answering a few, simple questions here.