Debt consolidation?
Question:
i have 25k debts and decided call consolidation agency.
is anyone out there used those agency before please give me advices. thank you.
Answer:
Myth: Debt consolidation saves interest, and you have one smaller payment.
Truth: Debt consolidation is dangerous because you treat only the symptom.
Debt consolidation is nothing more than a "con" because you think you've done something about the debt problem. The debt is still there, as are the habits that caused it - you just moved it! You can't borrow your way out of debt. You can't get out of a hole by digging out the bottom. True debt help is not quick or easy.
Larry Burkett, noted financial author, says debt is not the problem; it is the symptom. I feel debt is the symptom of overspending and undersaving. Our certified counselors will not recommend debt consolidation for a client. Why? Because debt consolidation doesn't work.
Debt Consolidation Statistics
A friend of mine works for a debt consolidation firm whose internal statistics estimate that 78% of the time, after someone consolidates his credit card debt, the debt grows back. Why? He still doesn't have a game plan to either pay cash or not buy at all. He also hasn't saved for "unexpected events" which will also become debt.
Debt consolidation seems appealing because there is a lower interest rate on some of the debt and a lower payment. However, in almost every case we review, we find that the lower payment exists not because the rate is actually lower but because the term 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, which is why they are in the debt consolidation business.
Debt Consolidation Example
For example, let's 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. Sounds great doesn't it? Who wouldn't want to pay $460 less per month in payments?
But they don't tell you that 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". Not such a good deal after all. This example shows you why they are in the business - becuase they make money off of you
I have used a debt consolidation service and it worked great for me. I had overdue credit cards, bills and school loans. They will work with your debtors to get your interest rates down too. It probably saved my financial life! I used Consolidated Credit Counseling Service.
I used debt consolidation a few years ago. Good idea to start getting the balances down but it doesn't report to your credit. You can add a statement to your credit explaining that you are enrolled in the credit counseling though. Once you enroll you have to destroy all credit cards that you enroll in the plan and you can not apply for any other credit while in counseling. Also, no matter the situation you have to make that payment ontime every month. Creditors dont' care about death in the family or any of that.trust me I found that out the hard way.
yes! it works. that is if you are talking about getting help with getting them paid off like credit counseling. We are going through it now. I speak very highly of it. here is the link that we use www.moneymanagement.org they only charge us $40.00 a month for them to manage our credit cards.
hope this helps.
I highly recommend NOT using a consolidation agency. They are not so good on your credit and they charge you to do what you can do yourself if you make some lifestyle changes and decide to call your creditors and work out deals with them.
I would suggest checking out Dave Ramsey's programs and learning about credit repair.
Caution: This advice could be life changing should you choose to accept it and implement it. Do not take it lightly.
Good luck.
Hi.
Try the finance comparison site on here:
http://loansaroundtheworld.co.nr...
Check out
http://www.mm-review.com/money/1.html...
YOu can check out what kind of debt consolidation information they can provide. I do know that they suggest doing it on your own and not going with a consolidation group.
Anyways, best of luck!
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