subject: Credit Card Debt Consolidation Advice - Is Debt Consolidation Right For You? [print this page] Credit Card Debt Consolidation Advice - Is Debt Consolidation Right For You?
Are you looking for credit card debt consolidation advice? If yes then, this article is the place where you learn whether consolidation is right for you or not. Just like debt settlement, debt consolidation is a method of debt relief. In this method, the consumer hires a professional consolidation firm. The firm can be a non-profit firm which means the firm will charge only for the expenses involved in the process of consolidation.
What happens in consolidation? In consolidation, the consumer pays off the entire debt to the creditor but at reduced interest rates. Some of the costs of the debt are also eliminated. These costs include service tax, late fee, over limit charges etc. The consolidator contacts the creditors and explains that the consumer is willing to pay the debt in full but the financial condition of the consumer is not allowing him or her to pay at the current rate of interest. If the rate of interest is reduced, the consumer can actually repay the debts in full. To ensure that the creditors reduce the interest rate and cuts off some of the costs of the debts, the consolidator threatens the creditors of bankruptcy and forces the creditors. The creditors do not want bankruptcy and hence the agree to reduce the interest rate. Once the interest rates are reduced, the loan repayment is re-amortized. The consumer then pays one time every month to the consolidator who then distributes the money among the creditors. This continues till the debt is completely repaid.
So, is this method right for you? If you are willing to repay the debt it full, yes, the method is right for you. You will have to have a constant income flow to be able to make monthly payments. So, if you have an income source, the method is right for you.
With the new FTC laws recently passed, debt settlement is a legitimate alternative to filing bankruptcy. Creditors are ready to negotiate and now you won't have to pay a fee unless your debts actually settle.
