Debt Consolidation Services
There is no magic youth pill that can turn back time or eliminate debt quickly and easily, but if you're like many Americans who are struggling to pay off their debts, you may find relief in a service called debt consolidation. However, it's wise not to be tempted by dubious offers from debt consolidation services promising to slash your debt in half. Some even claim that they can raise your credit score!
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When people ask us about debt relief, we suggest they forego the "instant debt relief" hype and instead, seek help from trusted and qualified companies. Backed by years of experience, these companies offer services such as consolidation loans, debt management programs, and debt settlement. These methods have been proven to eliminate credit card debt, and depending on your financial situation, they may work for you, too.
With debt consolidation (aka debt management program), you will typically combine all your high-interest credit card bills into one lower payment that is made to a consumer credit counseling agency. Under a debt management program, a credit counselor will make proposals on your behalf such as a lower interest rate or the elimination of penalties and late fees to your creditors.
Once your creditors get a clear picture of your finances, they may agree to a repayment plan that is, hopefully, more affordable for you. If you're ready to get started with any debt relief service, including debt consolidation, we can get you more information on help that is available through a free debt relief analysis and savings estimate.
Debt Consolidation - Not a Debt Consolidation Loan
Be careful not to confuse debt consolidation with a debt consolidation loan, where you take all your outstanding high-interest credit card debts and combine them into a single lower interest payment. However, be aware that while a debt consolidation loan does work in eliminating credit card debt, in some cases, people who take out such loans end up running high-interest credit cards again.
Consumers using a debt consolidation loan to pay off their high-interest cards have to be careful not to fall into the temptation to spend more because they have a new loan. When this happens, you may be responsible for your high-interest credit card bills plus a debt consolidation loan. The situation gets worse if you use your home to secure a loan because the bank can seize it if you default on the terms of your loan.
An increasing number of consumers also choose to settle their debts. Under a debt settlement program, or debt negotiation, companies may agree to "forgive or settle" your debt for a lesser amount than what you owed. With this approach, debt settlement companies will usually advise their clients to stop paying their bills and save up money towards paying a one-time, agreed-upon lump sum. If debt settlement sounds like it may be a good option for you, be aware of the potential cost and time involved.
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Debt settlement may also have a negative impact on your credit; some creditors may even sue you once they find out that you are working with a debt settlement company. In spite of the potential risks, many consumers still seek debt settlement companies and decide that it is still better than declaring bankruptcy, which is often a last resort because the consequences on their credit are more far-reaching and long lasting.
Guidelines and Tips
To protect yourself against companies that charge high fees or promise services they don't intend on rendering, look into members of the National Foundation of Credit Counseling (NFCC), the oldest network of non profit debt management companies committed to providing free and affordable services to debt-saddled consumers. Some consumers have also found success in working with a Christian debt consolidation company.
Legitimate non profit debt consolidation companies usually offer free budget counseling, money management, and debt management plan services, while those that charge fees (or accept donations) typically keep the rates low and affordable. If you would like to explore debt relief options to see if debt relief is right for you, you can request a free debt relief analysis and savings estimate in minutes. Start by answering a few, simple questions here.