subject: How A Debt Consolidation Program Works [print this page] Debt consolidation is a program where one can replace the multiple bills with a single monthly payment. This is a method that is meant to lessen the debt burden by cutting back on the interest rates that are incurred by the different unsecured debts. These services are offered by professionals that will help you consolidate the bills.
There are several steps that are involved in this program which starts by the consolidator going through your finances first in order to know the state of your finances. This involves computing the depth of your bills and getting the total amount. Once your outstanding payments are known one is required to get financial counseling on various tips one can use to take care of your finances as well as having the opportunity to ask any questions that you may have.
Once you are convinced that this is the program for you then a written agreement will be offered to you. Be sure to read all clauses before accepting and clarify all your doubts before signing it. The next step should be to inform all your creditors that you have enrolled in the program and that all your finances will be handled by the consolidator whom they will contact.
The consultant will prepare a payment plan for you that will be suited specifically for your financial state. The professional will also inform your creditors of the program so as to convince the collectors to reduce their interest rates as well as to remove nay fees charged due to the lateness of payment. However, it is not a guarantee that the creditor will comply with the request.
Should the creditors like the program then they may accept it and one has to abide by it. This means that one will have to start making payments to the consolidator every month who will then forward the money to the each of the collectors. Therefore the responsibility of making payment falls on the consolidator and this eliminates the worry that you may have on the high interest rates as well as other fees.
Also one may need to recognize that even during the repayment period, your financial state may not necessarily remain the same. Should your situation deteriorate then be sure to consult with your consultant who will then renegotiate with your creditors and come up with a new repayment plan. This is the step of reevaluating your financial state.
Before choosing debt consolidation companies there are some factors that you should look at. Be sure to ascertain its accreditation for doing such business as well as going through the feedback from its previous clients. Also ask for its success rate in handling similar situations so as to know your chances
by: Lena Shattuck
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