Debt Consolidation: The Important Things You Should Know

Many people turn to debt consolidation when their creditors begin calling. Does this situation sound familiar to you? Are you ready to take the steps necessary to get you bills under control and to get creditors off of your back? If this is your situation then you’ll probably want to go over this article so you can learn more about debt consolidation.

One sign that a debt consolidation company is reputable is whether or not they are a member of an organization, like the National Foundation for Credit Counseling. Even if the company verbally confirms to you that they are a member, make sure you still research it to make sure what they are saying is true. A member of an organization like the NFCC has to follow certain rules, like only employing certified credit counselors.

Avoid debt elimination arbitrators. These companies love to claim that your debt can be eliminated, though in reality they know that only bankruptcy can result in total elimination. The best these companies can do is reduce the debt you owe. Surprisingly, this is no different than you could do by calling and negotiating with creditors yourself.

Before choosing a debt consolidation company, ask how the counselors of the company are paid. If the answer is “on a commission basis”, then you may be best to look elsewhere. Someone working for commission will say or do many things that are less of a help for you and more of a help to their overall income.

Consider filing for bankruptcy. Whether Chapter 13 or Chapter 7, it can be a bad mark for your credit. However, if you’re already not able to make payments or get any debt paid of, you may already be dealing with bad credit. Bankruptcy could let you start over.

A home equity loan or a line of credit is a good option if your home is paid off. You can basically borrow money and use your home as a collateral. Borrow just enough to pay your debt off and make your loan payments on time. You can deduct the interests you pay on your loan from your taxes.

When looking for a debt consolidation firm to help you sort out your debts, try to solicit recommendations and advice from friends and family members who have undergone a similar process. In this way, you will be able to trust the information you receive and feel confident that you will be getting the type of service you need and deserve.

While you’re in debt consolidation, think about the reasons you got into this position to begin with. After all, you don’t want to end up in this position five years from now. Dig deep down to determine what caused your debt to prevent it from occurring again.

Make sure you know how much a debt consolidation company is going to cost you. Have a discussion about their fees. Make sure you know your rights as well. The company cannot charge you any money until they actually do some work first. Discuss the payment schedule with them and move on if you hear anything you do not like from them.

Looking into non-profit consumer credit counseling. Such companies work to get your debt managed and combined into a single payment. Using a counseling service doesn’t hurt your overall credit score like using a professional debt consolidation service might.

It should be easy to see why debt consolidation can be a wise financial decision. You can get your bills put into one simple payment every month. Escape debt quickly and ease your stress by using the tips above.

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