Are Debt Consolidation Agency's a good idea to help lower debt?
Question:
We are 22 years old, I have a steady well paying job and he is in the military. We do not have creditors calling yet, but we are struggling to pay the minimum payments. 1 of his credit cards did get recently charged off.
I tried shopping for Debt Consolidation Agency's and the one i looked into was going to charge us a $2,750 service fee! Is this normal?
Our total debt in Credit Cards alone is appox. $18,000 (not including car payments, household bills etc.)
HELP! If not a Debt Consolidation Agency, then what? And if i go with a Consolidation Agency will it affect my credit?
Answer:
You don't have to go to a debt consolidation agency. You can try one of the banks or financial service companies too.
There is one company out there that analyzes your debt and see if you qualify to consolidate through them for free. If you qualify with them, the cost to consolidate or refinance is included with the loan. When you consolidate your debt into one monthly payment, usually the monthly payment is lower. This means, you saved some money.
But the company doesn't stop there. They show you how to get smart with the savings. They use some of your saving and apply it to the principal and the rest of your savings is invested in mutual funds. By adding more principal to the payment, this will get you out of debt sooner. The program has a free bi-weekly payment option as well. Paying bi-weekly will get you out of debt even sooner than just paying monthly.
Fees associated with consolidating debt or refinancing usually cost a couple thousand dollars. There is so much fees involved to do it. Its like you buying your first home and there are fees involved in getting that mortgage.
Yes, they are.
All a debt consolidation agency does is loan you money. They pay off your debts and you wind up paying back the same money to them at a much higher interest rate, plus the stated fees.
Go to a credit counselor who doesn't want to sell you anything for assistance in dealing with debt.
no, don't use them. you can consolidate your own bills but it will take some effort on your part. YOU have to learn money management and just can't give it to someone to fix or you will be back in debt again.
they are debt CON-solidation agencies for a reason. the can mess up your credit even more. it's better for you and hubby to sit down together and write down a payment plan on how you are going to pay your bills. the 2,700 you spend with an agency can be applied toward your debt.
i think wells fargo financial offers loans to consolidate your bills, check them out.. I hope that helps.
Debt consolidation companies can be very helpful yes. Talk to a few and make sure you are careful, there are scams out there, but most are helpful.
http://www.too-many-debts.com
Do not use Debt Consolidation Agencies. Debt consolidation does not fix the problem of being in debt. Check out Dave Ramsey's book The Total Money Makeover. It provides a step by step method to get yourself out of debt and building wealth so you never ever have to borrow money again.
It's working wonders for my husband and I.
you need to start reading books on how to manage your money and how to get out of debt books. educate yourself. This is a sad thing at such a young age. Debt con. need to make money on you also. No service is free. You need to start living below your means.
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