Consolidate debt

If you’ve watched TV lately you’ve probably noticed a lot of commercials for debt consolidation agencies. They all run slick commercials with friendly sounding operators and beaming customers talking about how they got rid of their debt, restored their credit and changed their lives. If you’re one of the millions of Americans who are out of work or otherwise struggling financially to pay your bills these ads can sound like the answer to a prayer, but before you call, do your homework.

Debt consolidation, which involves getting a low fixed rate loan to pay off your high interest credit cards, can be a smart move if done through a reputable company, but finding one isn’t always easy. Some of these companies prey on the desperation of people drowning in debt. They charge high fees, don’t honor their quotes, and some of them aren’t even debt consolidation companies at all but rather large call centers that are paid to refer you to other companies. So how do you find a debt consolidation company that won’t do more harm than good? Start with the internet. Google the names of companies you’re interested in and look them up on the Better Business Bureau’s site (bbb.org). Look at how long a company has been in business and take that into account along with their score. Talk to friend and family and see if they have any recommendations. Don’t rely on sales pitches!

Reputable consolidation companies will give you a no obligation quote up front along with their rates and fees, the suggested monthly payment amount, and tell you when you can expect to have your debt paid off, which is usually somewhere between 12-36 months depending on what you owe. Any company that won’t give you all this information up front, especially if they won’t tell you your payoff date, should be avoided. It’s also important to make sure the company you chose will allow you to stop the loan process if you feel uncomfortable with the terms or the rep you are working with.

By: Zach Ford

It’s no secret that millions of people are literally drowning in debt, and many are desperate for solutions to salvage their finances. Not surprisingly, they are drawn to television and internet ads and articles offering free information on debt consolidation. One of the major methods provided is loan consolidation of all obligations into one single loan and single monthly payment. The problem with all the hype is that sometimes free advice is worth exactly what you paid for it!

It can take the form of a secured or unsecured loan. One of the dangers is that a debtor may jump at lower payments and turn unsecured debt into a mortgage loan against their home or other property, get behind again, and lose everything. Others who owe don’t even have the assets to get a secured loan and can’t even choose that option.

Some lenders will take advantage of the desperation to charge inflated interest and other less than ethical although likely legal means to turn a profit. One protection for this is seeking a nonprofit company for advice and help. Again, like not all loans are good deals, not all nonprofits are equally reliable. The company may not show a profit but executives may be paid extreme salaries to disperse what would be profit.

Never assume that a nonprofit loan consolidation is the best deal. You must thoroughly investigate them before signing just as you would a for profit company. If you have student loans, first check out whether you may be eligible for federally sponsored loans. Don’t forget to first inquire of your own bank, since a long financial relationship may help you.

If you can find a good source for free debt consolidation advice, there are many advantages. These companies may buy loans at a discount and be able to reduce the total owed, and consolidation means only one payment nearly always less than the total was before, and at a lower interest rate, even unsecured. This reduces stress and calls from collectors and helps rebuild your credit.

All of these companies will offer credit counseling and budgeting advice to help understand how to avoid the same mess again. A legitimate company will be honest when recommending bankruptcy is the only real option as well. If a company says they “never” consider that, look elsewhere. While difficult it is sometimes necessary. Some firms negotiate debts down for you in addition to consolidation so explore all options.

About 50 million people in the US are already in credit and debt trouble or on the brink of it, so it is a huge problem. For many, this is the likely answer and finding the widely available free advice is a good first step out of trouble. Ignoring the problem can’t work and only makes things worse. Check credentials and compare the services of several debt relief companies before you choose

By: Bruno Auger