Debt consolidation is an excellent way to get out of debt. It is also the most popular method used by debt relief networks in getting consumers into good, responsible debt management programs. It is also used by some consumers as a means of getting out of debt.
Many consumers end up in debt by spending too much money on a single bill that they fail to pay on time. When there are two or more bills to be paid, people often do not have the time or money to keep track of all of their payments. The resulting bills pile up until it becomes clear that they cannot make it all. Then they take the only option left to them – consolidate all their debts into one lower monthly payment.
What is most attractive about consolidating credit card debt is that you can consolidate into just one monthly payment. You may owe ten different credit cards and ten different credit companies. By paying all of these companies one monthly fee, you will only have to make one payment a month to your consolidation company. Since you will only have to make one payment, you can afford to spend less than before and still pay off your consolidation loan.
Most debt consolidation loans have a lower interest rate than the original debts. The fees for the consolidation are usually a small percentage of the debt that you are consolidating.
The Consolidation Process: First, choose the best debt consolidation company that will be servicing your debt. Once you have chosen the best company, they will contact your creditors and negotiate with them on your behalf.
They will generally negotiate lower monthly payments if you agree to do a debt consolidation program. This is a proven way to reduce your monthly payments and it also means that you will be paying less interest on your debts than you would have in your current situation.
You can also ask that your existing creditors offer a portion of their payment to you as part of your consolidation loan. You may be able to negotiate lower payments than what they were previously willing to offer you.
It is important to remember that you are only doing this if you are thinking about paying off your consolidation loan in a reasonable amount of time. If you can find the time and the money, you can do it yourself. However, if you want to do it right the first time, and you do not have the funds to do it, then this is your best option.