Debt Relief Services – Are All Debt Consolidation Services Equal?
Debt Relief Services Are All Debt Consolidation Services Equal
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Since the economy has gone through a major slow down, many people are trying to pay off their debts. Some people opted for a mortgage loan modification in order to get better interest rates. While some had opted for a second mortgage in order to get their hands on some cash to pay off their debts. There methods however, started to backfire once the economy went from bad to worse. Another popular debt relief method was debt settlement, which in true sense is harder to get. Hence choosing a debt relief option can be a difficult task.
Many people had tried to fix their debt problems by consolidating their debts through either refinancing or with second mortgage. They could use the instant cash to pay off other debts such as the credit card bills. This did not work out after the real estate market got hit by the economic turn down. The major drawback of this method was that a debtor needs a flawless credit rating. Only with a good credit rating and a customer get mortgage refinance to the market value which is less than 5 % currently. However, if the consumer's credit rating has any negative points then he or she might not be able to get a cash advance with a lower rate.
While considering debt consolidation you need to be careful about a few points.
Carefully analyse your finances before you opt for consolidation, get a personal loan to do it yourself.
If you get a debt consolidation loan for a higher interest rate than your current interest rate then you will be in a worse mess than before.
You will have to put up your house as collateral. This you can lose if you can't make payments or if your payments are late.
These loans have a certain tax advantage that you might not get with other types of credits.
There have been certain financial reforms made by the Federal Trade Commission to protect the rights of a consumer. One of the major tasks undertaken by the FTC is to identify and put a stop on the crooked debt relief services. Hence if you have had an unpleasant experience with a debt relief service, then it should be reported. Any debt consolidation cannot charge a fee in advance. They will have to disclose all potential costs to their customers in advance.