What is Debt Consolidation?

Debt consolidation involves taking all of your credit and revolving debt and rolling them into one big loan with a lower monthly payment to consolidate debt. The idea is that, in this way, debtors who are literally drowning in debt for which they can no longer make the monthly payments, can get their debt paid off without having to take more drastic measures, like bankruptcy.

An individual can pursue debt consolidation on his/her own, however, it is not a task for the meek, and it requires great negotiation skills, as well as a thorough investigation of how to negotiate with creditors for lower interest rates and lower total debt amounts. Basically, you want to get the debt amount lowered before you go for the consolidation loan, and you need to get the new lower amount in writing. Most creditors will settle for less if they know that the entire balance is going to be paid off soon, but you have to know how to accomplish it. Just navigating the telephone system to get to a decision-maker can take the better part of a morning! Then, if your credit rating is poor, finding a lender willing to make the consolidation loan will be tough. And you could end up with an exorbitant interest rate.

Debt Consolidation Companies

Most people who pursue consolidation do the research and locate a company with whom they feel comfortable. There are not-for-profit organizations offering this service as well, but be careful – some are not truly not-for-profit and will get a fee from you as well as a “kick-back” payment from the lender providing the consolidation loan.

You have to do lots of research into these companies to find one that is a fit for you. Do not be afraid to get aggressive in asking about fees and interest rates of a loan they may secure for you. Find out how much they believe they can get off of your total debt before the loan is secured. Get as much in writing as you are able. And do not be afraid to negotiate the fees. There is a lot of competition out there for your business, and if you don’t ask there’s no chance of better fees and interest rates.

The Way to Debt Elimination

A good consolidation firm will do more than get you a loan and negotiate with your creditors. If the company does not provide counseling and advice about prevention, helping you establish a budget and change your spending behaviors, then it has not done its job. You can’t eliminate debt permanently unless you know how to do things differently.

What is Debt Consolidation?

Debt Consolidation Companies

The Way to Debt Elimination

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