Understanding How Debt Consolidation Companies Work

March 26th, 2014 | Author:

[O]nce you have decided debt consolidation through a company is the path to take, you need to find out which one is best for you and is reputable and honest. The term “buyer beware” applies here too! Be sure you have done your homework on your debt and what you can afford to pay each month before you get started.

Check out the agencies in your area first. Research the Better Business Bureau for their membership or complaints filed on them. Do they have a good reputation and are they licensed? Remember, each state might require different requirements for operation. You do not want to complicate your situation with the wrong agency.

Not All Agencies are the Same

Not all debt consolidation companies are the same nor do they all change the same fees for their services so it is vital you find the one which works best for you. If ones in your area do not meet your needs or do not appear credible, broaden your search.

If you feel rushed into making an arrangement with a company, back off and think about it. Even ones which call themselves “non-profit” usually charge fees for their services.

How They Work

The company you choose will make monthly payment arrangement with your creditors, which will stop the collection calls. This one step can make you feel less stressed.

The cost will vary. Some companies take a percentage of each of your payments, some take the first and second payments for “administration costs”, and others add a percent on the total debt. There is no hard and fast answer to the costs but this will give you an idea of what to initially expect. Be sure you are aware of the fine print, i.e., late fees, administration costs, handling fees, etc. All of this can add up rapidly and cause you to regret your choice. Read the fine print.

Once you have decided on a company and have an agreement, stick to it! Consolidating your debts is a viable option for people and can bring a great deal of relief. Once you have done so, be sure not to live above your means and work to keep your spending within limits. Pay more than the required amount when you can and you will reach your goal of having your debts paid.

Newest Answers

Big Changes Coming to Credit Reports

August 18th, 2017 | Author:
h

[I]f you have a bad credit score, you may benefit from the changes coming to credit reports soon. If you’re one of the lucky ones, you’ll see your credit score improve. In fact, it is expected that up to seven percent of those who have credit histories could see a benefit. What Changes Most civil […]

Continue Reading »

Be Realistic When Budgeting to Get Out of Debt

August 17th, 2017 | Author:
h

[Y]ou’re deep in debt and you want to pay it off to improve your credit score and to make life simpler. You want to pay it off as quickly as possible, which means making some major changes in your finances and life. Many experts tell you to stop spending any more money than you have […]

Continue Reading »

3 Ways You Can Waste Your Money

August 11th, 2017 | Author:
h

[I]f you’re trying to become more financially stable and improve your credit rating, you must be careful with how you spend your money. While you don’t want to give up everything fun in life in order to be frugal, you also want to avoid wasting your money on unnecessary expenses. Here are three ways people […]

Continue Reading »

Starting Over from Bad Credit

August 9th, 2017 | Author:
h

[Y]ou hit rock bottom with your credit. All of your accounts went to collections and your car was repossessed. You don’t even want to check your credit score because you know it’s bad. While the situation might seem hopeless, you can turn it around. Once you’ve lost any credit worthiness, you are ready to work […]

Continue Reading »

How to Talk to a Boyfriend/Girlfriend about Their Credit Rating

August 7th, 2017 | Author:
h

[I]f you’ve been dating someone for a while, you may be getting serious. Before you start dreaming about the perfect wedding day or what life will be like with 2.5 kids and a dog, you need to know you’re on the same page about important issues. While many people think nothing of talking about how […]

Continue Reading »

3 Ways Credit Matters to Everyone

August 4th, 2017 | Author:
h

[Y]ou pay everything with cash. Your motto is “If I can’t pay cash, I can’t afford it.” That means no credit ever. You may assume that you don’t need to worry about your credit score if you don’t plan to use credit to buy anything. Unfortunately, credit isn’t just about loans and credit cards. A […]

Continue Reading »

3 Tips to Help Your Kids When They Have Summer Jobs

August 2nd, 2017 | Author:
h

[I]f your kids are old enough to take on a summer job, now is a golden opportunity to teach them about money and finances. If you start them out right, they will know how to handle money and financial responsibility for when they are earning a full-time income. Here are three tips to use this […]

Continue Reading »