Is this the way that a debt consolidation company works? They reduce the amount?
Sunday, November 29th, 2009 at
5:02 pm
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Tagged with: Consolidation Loan • Creditor • Debt Consolidation Company • debts
Filed under: Money Saving Tips
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I have dealt with debt consolidation multiple times and never has any company suggested (nor would I believe they could) that they could cut my principal. They can only reduce your interest rate by giving you a new loan at the lower rate. They can pull multiple loans into one, but again the principal amount remains unchanged. You owe less because your interest is less or the life of your loan is longer so you pay less monthly for more months. I consolidated several credit cards and my interest rates went from 23+% down to less than 10% so my monthly payments were half of what they were. Most of those companies are owned by the same group of banks and continue living to ensure that you continue to pay and don’t go into default or file Chapter 7. Don’t reckon they are doing you any favors.