Question:
i am about 2,000 in debt and i also have $300 car payments that make it difficult for me to pay the rest of my bills. my bills have gone to collections and although they are only $200-400 for 3 cards and 1,000 for another...creditors are demanding that i make payments in full or divide it in half and pay between 2 months. i know that i have made poor decisions but i would like to take care of this before it gets any worse. i contacted a debt consolidator and he told me that although they normally require 2500 in debt he would be able to help me with the approval of his supervisor, he also told me that he could probably get my payments back to their minimums. but what i'm not sure of is whats in it for the consolidators? how much am i going to have to pay them for this service? he said it would be about a $40 activation, but i'm sure they must make more than that, is it going to make everything worse in the end?
Answer:
You could try to negotiate with the creditors on your own, but debt consolidators usually do much better - they can sometimes reduce the debt by up to 75% if your debts have already been turned over to collection agencies.
Some loan consolidators will try to charge you fees to cover their time and expenses. Others negotiate deals with collection agencies so that they take a cut of the agencies' profit on each settlement.
One debt management site I know of that offers free debt analysis and free credit repair consultations is:
http://www.mortgageous.com/debt-consolid...
I would shop around and talk to multiple debt management and consolidation firms. They're competing for your business, so see who can get you the best deal.
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Try this, bring the arrears on the credit cards up to date. That is, pay the minimum payment due. Once you are up to date, the collection agencies can't collect because you are no longer in arrears.
You should consider saving yourself the monthly fee that the Credit Consolation company will charge and do it yourself. You can visit my about me section to learn more.
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
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