Is debt consolidation a reasonable solution?
Wednesday, January 20th, 2010 at
7:12 pm
I һаνе a lot οf debt spread out аmοחɡ credit cards, private loans, hospital bill, etc. Iѕ іt possible fοr mе tο consolidate аƖƖ οf tһаt іחtο one payment each month? I һаνе ԁіѕtrеѕѕ keeping οח top οf аƖƖ οf mу bills bесаυѕе none οf tһеm fall οח tһе same day. Dοеѕ tһіѕ seem Ɩіkе a ехсеƖƖеחt option? AƖѕο, wһο/wһаt company іѕ reliable fοr debt consolidation?
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Tagged with: credit cards • Debt Consolidation • Debt Solution • Hospital Bill • Lot • Private Loans • Reasonable Solution
Filed under: Money Saving Tips
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“Debt consolidation” can refer to two absolutely uncommon things: The first is getting a loan to pay off all debts to consolidate your bills into one lower payment. If you do this, go through a local bank that you know and entrust. Stay away from online firms. You need to have excellent credit to get this type of loan. Many people who get debt consolidation loans quickly find themselves in double as much debt as when they started….because it’s simply too tempting to start using all that newly available credit that was paid by the consolidation loan. If you get this type of loan, contact your credit card companies after the debt has been paid off by the loan and request voluntary credit limit reductions to under $500 to avoid the temptation of using all that newly available credit again.
Debt consolidation also refers to a risky practice of debt settlement: deliberately defaulting on your credit cards to try to force your creditors to settle for less.
When you sign up with a debt consolidation firm, the program involves deliberately stopping payments to all your creditors to force your accounts into default to attempt settlements for less. You pay a monthly fee to a debt consolidator….this entire fee goes towards construction a settlement account and to the consolidator’s fees to “settle” your accounts in the future. Your credit card companies will deliberately not be paid so that all the accounts will default/charge-off so that they can attempt settlements at around 50%. If you are current on your accounts, this process will ruin your credit rating. You can never predict how your creditors will respond to the deliberate defaulting of your accounts…they might settle at 50%…or they might serve you a summons, take you to court…and if they win, you could be looking at wage garnishment.