Finding yourself under crippling debt is a nightmare turned reality for many people. No matter how hard they try to pay off their debt it just never seems to go down. This is where debt consolidation comes in. Debt consolidations allows you to have one bill from one company every month. Sound like a dream? You can make it succeed for you.
First, let’s take a look at what debt consolidation really is. The most important step is finding a debt consolidation company that is right for you. You can utilize the internet to make your search easier and to also find comments form those who have used the company before. You will want to look for positive reviews about companies that have helped other consumers effectively reduce their debt. The company that you ultimately choose will send you a monthly statement with all of your bills consolidated into one. They are the only company you will you have to pay and you will have one interest rate along with one minimum payment.
This can be great for those who have trouble keeping track of the numerous bills they need to pay each month. You won’t miss or forget a payment because you only have one to make. This can also be good for those who have many different, and possibly high, interest rates. Since the debt consolidation company will give you one interest rate there is a good chance that it will be much lower than many of your current rates, which will reduce your overall payment.
Another advantage to consolidating all your bills into one is that you no longer have to dodge creditors calling you left and right. Since you are only dealing with one company there will only be one creditor to discuss any issues you may be having and one person to negotiate your payment plan. How you deal with your finances will become easier and less problematic when only one company is involved.
However, there are many unreliable credit consolidation companies out there with only one goal in mind – to profit off of you and take your money. These are the types of companies that you should be watching out for. Some of them have even been known to make late payments, which would further your credit troubles.
So how do you know which company is a legitimate company looking to truly help you reduce your debt with affordable monthly payments and a reasonable interest rate? First, try to steer clear of companies who try to sign you into an agreement quickly or who do not take the time, or at least offer, to have an in-person consultation between you and one of their consultants who can walk through your situation with you.
For instance, a good credit consolidation company will take the time to have a lengthy consultation with you in order to go over your current finances. Examining what you bring in per year or month versus what you spend. They will then help you look for ways to cut down on unnecessary expenses, such as your morning coffee from Starbucks or your expensive lunches, to determine how much more you would be able to put toward the repayment of your debt.
A good company will then determine if they can give you a lower monthly payment, without raising your overall repayment by doing things such as giving you a higher interest rate, than you already have. If so, they will let you know how much your payments will be and also help you determine exactly how long it will take to pay off. If not, then they should let you know that what you are already doing is the best you can do for yourself instead of promising things that they will not be able to live up to.
Another way to tell if a company may be out to get your money is if they ask for “voluntary contributions” or some other form of regular payment from you. How most good companies make their money is by getting a kickback, usually between 10-15%, from the credit or loan company. So if you are to give the company you owe $500, that company will then give the credit consolidation company $50-$75. However, if a company is also asking for money directly from you on top of that, then they may be just adding an extra unnecessary expense to your already full load.
No matter what company or business you plan to enter an agreement with or trust with personal or confidential information, whether it be for credit consolidation or a completely different matter, you always need to check your local Better Business Bureau, and any other consumer reporting agency you can find, to make sure there are not an overload of complaints about the particular company. If they have not been around long enough to tell then it is wise to go with a different company instead. Many companies who are out there to rip you off and actually steal your money open up and close down quickly, only to transform themselves into another company to repeat their malicious practices again without consumers realizing what is going on.
One more thing you need to know is that most companies cannot help you do anything that you probably couldn’t do yourself. If you have the organization, time, and sanity to deal with your individual credit companies then you may be able to renegotiate a payment schedule while reducing your interest rate and possibly your overall debt. However, you will still have to keep track of multiple payments every month so you also need to learn to stay organized. It may be worth a small fee, if you cannot find a free organization, to have someone walk you through the steps and have one monthly bill.
Debt consolidation can help you take control of your bills and mounting debt if it is done right. You have to pick the company you choose carefully and remember not to jump into an agreement to quickly. Take some time to read over and inspect any contract you are asked to sign. If you are urged by the company to sign quickly on-the-spot, then it is better to pass them up anyway. This is your money and your life, you cannot let anyone else ruin it for you just so they can make a quick buck off of your financial troubles.
