Debt Consolidation HelpPosted on: March 24, 2010
If you find yourself unable to make monthly debt payments, debt consolidation offers a way to lower the payments down to a level that's more affordable for you. But can you do to help yourself and where cam you go for help in finding out what your options are for debt consolidation? This article will focus on steps you can take and where you can turn for debt consolidation.
Ask Lenders for Help
A good place to start is having a discussion with lenders. While it can be stressful to do this, asking lenders for help may alleviate resolve the situation. Many lenders will agree to reduce a monthly payment or defer some payments, especially if an emergency is the reason you are struggling to make your payment.
Do-It-Yourself Debt Consolidation
If you haven't reached a point where you can't pay at all, it might be possible to move some of your debts around. For example, as long as you're careful about the credit terms, moving debt from higher interest credit cards to credit cards with lower rates can shave money off the amount you owe each month. If you do this, you absolutely must be careful not to spend money on cards that are paid off or have reduced balances.
Debt Consolidation Companies
If speaking to creditors does not resolve the problem or it's not possible to reshuffle debt on your own or if you've already missed payments, debt consolidation may be the right course of action to consider. Debt consolidation services can include negotiating with lenders on your behalf. These companies often know the ins and outs of how working with lenders in general, and sometimes certain lenders in particular.
The reasons not to turn to debt consolidation companies initially is that they a have no legal standing in terms of the relationship between you and your creditors. They don't represent you. Therefore, they can help you through a situation but not prevent a creditor chooses to take action, including sending collection agencies or initiating legal action.
Some debt consolidators are not-for-profit companies and others are for-profit. Non-profit companies are funded through donations, grants and even through creditors themselves, so they tend to charge little or nothing to clients. For-profit consolidators charge a fee which is either paid by the client or else by the creditor.
Debt Consolidation Services
Debt consolidation services include providing a loan to pay off outstanding debt with a single loan at a lower interest rate, combining existing debt payments into a single, lower payment through negotiations with creditors, and debt management and credit counseling.
For reputable companies, the idea is to not just to help clients handle existing debt but also to guide and educate individuals on maintaining good financial habits going forward. Both paying off the debt you have and learning behavior to prevent getting into financial straits in the future are long term projects. You'll need to be patient with yourself and keep remembering that time is your ally.