subject: Debt Consolidation Programs Pros And Cons – Let's Explore Them [print this page] Debt Consolidation Programs Pros And Cons Let's Explore Them
Honesty and realism are two very important elements that must be involved with any debt relief scenario.
Therefore, it is essential that you explore the pros and cons of debt consolidation thoroughly before deciding whether or not it is the debt solution for your particular situation. Here is a short breakdown of some pros and cons when it comes to debt consolidation programs:
Aurora Lillo Editor of the "Best Debt Consolidation Companies" website -- http://www.BestDebtConsolidationCompanies.net -- pointed out;
"...Pro - Stop the Downward Spiral
When you take out a consolidation loan by which to pay off all of your individual creditors, you immediately put an end to a credit situation that is caught in a downward spiral. All of your negative credit activity due to late or non-payments will cease the instant all of your creditors are paid off and your accounts are closed. In addition, all possible fallout due to harassing phone calls at your place of employment or incessant mailers to you friends and family will immediately be put to an end..."
Con - Initial Ding to Your Credit
When you pay off all of your creditors, you will essentially be closing your open lines of credit. When you have less credit activity, your credit reporting agencies notice this and lower your credit score accordingly. Although a slightly dinged credit score due to account closures is still better than repeated monthly dings due to late or non-payment, this 'con' is definitely a factor that you need to consider before enrolling in a consolidation plan.
Pro - Negotiating Leverage
When you have a large sum of money with which to negotiate, your creditors are likely to reduce the total amount of money required to close your accounts out once and for all. If you are a credit risk, your creditors would rather accept a lower lump sum of money than to assume the risk that you will not repay your loans. They would rather have less cash right now than no cash at all. Consumers can take advantage of this fact by using their consolidation loans to negotiate settlements up to 50% less than the original amount owed.
Con - Fees and Interest
"...When you sign up for a streamlined monthly payment plan, you will most likely be charged a registration fee of between $50 - $75. In addition, you will likely be charged monthly fees and interest rates that might exceed your current individual creditors' rates. These fees should be considered carefully before you decide whether a consolidated debt plan is right for you..." added A. Lillo.
Further information about trusted and reputable companies for debt consolidation by visiting; http://www.BestDebtConsolidationCompanies.net
