Has anybody used a debt consolidation place?
Question:
Answer:
Consolidating debt is an ideal way to reduce your amount and tenure of debt. You make a single payment to one lender on a certain date and this will help you clear off the debts faster. But the fact remains that debt consolidation is not easy all the times. If you owe a lot of money, obtaining a consolidation loan at the lower rate of interest can be difficult. Choosing a high interest loan can increase your debt.
The primary aim to consolidate debt should be to reduce your total costs. To achieve this, you have to consider the following two points:
-Shop around for the loan with the lowest interest rate.
-Chalk out a strategy to clear off the debts in 3-5 years.
The following are some of the best methods of debt consolidation:
I have recently started a job as a loan officer and one of the things i learned is that the credit card consolidation companies will ruin your credit. What they do is they talk to whoever you owe money to and get the amount reduced. Then your cards get cancelled. Now this may sound good, but it will show up as a an "Invoulantary Bankruptcy" on your credit report because you are not paying the full amount you owe.. It is similar to having a regular bankruptcy. Then when you make payments to them, they will not pay your bills on time. They will also charge you anywhere from $40 to $100 per month for using the service. Your credit will go back up in a few years, but first it will go way down. So i wouldnt do it. They call themselves non-profit, but you still have to pay to use their service and its a pretty crappy deal that you pay and yet your credit gets ruined. You better off getting a personal loan from your bank.
I would stay away from debt consolidation. Many of these companies exist to benfit the creditor and themselves. Depending on how the consolidators structure things, it can damage your credit rating.
Step #1: I propose that you try to find some credit cards with low introductory rates on balance transfers and move your existing balances. Proactively manage your accounts and when the introductory rates expire, move your balance to the next offer.
Step #2: If you are in good standing with your current credit cards (no late payments, making the minimal payments, etc.) call them and try to negotiate a better rate on your account. Like any business, banks do have to compete for customers.
Step #3: If possible take a second job temporarily and use the earnings exclusively to pay down your credit card debt. This will not be fun, but think of it as negative reinforcement to not run up your credit card debt.
Step #4: Cut up your credit cards!! Keep only one card and use it for emergency purposes only.
It is to the banking industry's advantage to get consumers in over their head with easy credit. When you have a low credit score, you become a more profitable customer to the banks (higher interest charges and in some cases higher fees). Low credit scores may also negatively impact your insurance costs and other services as more companies are factoring credit scores into their customer evaluations.
Good luck.
DON"T DO IT !! You might as well declare bankruptcy...and I don't recommend that either. you will lose all your credit cards, and you have to pay them for their service and the companies you owe.you can do that yourself. Contact the companies yourself and tell them that you will pay them so much a month and in that time you will not use your card until all is paid off.
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