Are debt consolidation programs legitimate?
Question:
No, they arent.
An example of debt consolidation:
~Say you have $30,000 in unsecured debt, including a 2-year loan for $10,000 at 12%, and a 4-year loan for $20,000 at 10%. Your monthly payment on the $10,000 loan is $517 and $583 on the $20,000 loan, for a total payment of $1,100 per month. The debt consolidation company tells you they have been able to lower your payment to $640 per month and your interest rate to 9% by negotiating with your creditors and rolling the loans together into one. Who wouldn't want to pay $460 less per month in payments? But it will now take you 6 years to pay off the loan. This may not sound that bad to you at first unless you realize how much more you will actually pay in additional payments. You will now pay $46,080 to pay off the new loan vs. $40,392 for the original loans, even with the lower interest rate of 9%. This means you paid $5,688 more for the "lower payment". They make money off of you, so they can be in business.
I agree that debt consolidation seems appealing because there is a lower interest rate on some of the debt and a lower payment. However, the lower payment exists not because the rate is actually lower but because the term of the payment is extended. If you stay in debt longer, you get a lower payment, BUT if you stay in debt longer, you pay the lender more.
if you mean the credit counseling services, then yes.
They work with your creditors to lower your interest rates so you can pay your bills off. Depending on the amount of debt, the program could take several years to complete and there are certain rules you must abide by while in the program, such as, not applying for any new credit. The good thing is, most of your payment goes towards the principal and not the interest.
Consolidation companies are legit, but before doing any business with one of them, I would advise that you check them out with the Better Business Bureau. Most of the consolidation companies will not tell you the negative aspects of their program, however. There are often additional fees involved which may end up costing you the same amount of money that you would have paid if you had dealt with the original creditors. Also, there are long term negative impacts to your credit report that they most often will not tell you about. Check them out carefully before doing business with them.
Yes. Consumer Credit Counseling Service is a real non-profit that has been around for decades. They have several different types of debt and financial planning services. You also have the option of going in to meet with a debt counselor (an option that many other services don't have). There typically is a chapter in each state. There may be a waiting list - but this is the most reputable debt consolidation/counseling service that I know of.
Best wishes!
http://www.cccs.net/webapp/entry.asp...
Some are, but alot aren't. You've got to check them out thoroughly.
"munsterrugbyfan" (above) has some real good points. Listen to him.
Yes, some of them are. There are a certain number of things you have to make sure of though...
1) make sure the company is listed with the Better Business Bureau (BBB)
2) make sure they negotiate payment terms that are advantageous to you, not just extending the length of your existing loans
3) make sure that, on a personal level, you're not going to go right back out and max out those credit cards again.
Other than that, you should be fine. Look into the below website
If you are trying to pay off your insecured debt, i would suggest you to join a debt settlement company who will negotiate with your creditors on your behalf and bring down your principal debt by around 30% to 70%.
You can make affordable monthly payments and get out of debt within 3-36 months. There are no hidden costs and upfront fees aasociated with the monthly payment option.
Check out this debt settlement company who helped me out with the unsecured debt situation.
http://www.debtfreeafterall.com...
Good Luck
"Going for online debt consolidation is a good option, you need to take into account the fee charged by the debt consolidation companies.
When you gets into a debt trap it becomes difficult to get out of it. Taking more loans to repay the debts leads to more stress and financial crisis. Finally, there is no option but to adopt debt consolidation, which leads to a new llease of life. Many people receive abusive calls from debt collectors and are stressed. Hence opting for debt consolidation is the number one solution and helps to overcome abusive calls and be free from mental stress."
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