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Question:

Debt Consolidation?

I am asking some general questions about debt (credit card)consolidation. 1. Does debt consolidation damage your credit score? 2. If you have a success story with a debt consolidator, please share if you could. 3. If you have a problem/issue with debt consolidation (or a particular company), please share if you could. 4. What do I need to know about consolidating my credit card loans? Thanks for any input.

Answers:

1) DON'T do debt consolidation. It just moves your debt around. It rolls high interest items AND LOW interest items into the same loan at a mid-range interest rate. It might lower your monthly payments, but that means it will take even LONGER to get out of debt. IT also frees up all your lines of credit so you can simply run them up again! Finally, you often have to pay a loan origination fee. Call all of them and work out a payment plan and try to get your interest lowered or stopped. Then, make the minimum payments on every one of them. On the lowest dollar value, put all your extra effort toward paying it off. Once it is paid off, then roll that extra money to the next largest balance. Continue this snowball until all your debts are paid off. You probably need to cut your expenses back to the bare minimum. Get rid of cable, cell phones, internet, etc. Lower your electric bill, gas bill, water bill, etc. Don't eat at a restaurant until your debts are under control. Take a sandwich for lunch. Cancel the gym membership. Try to increase your income by getting a second job. If you have a car with payments, get rid of it, and buy a good dependable used car for CASH. Go to the library and get "The Total Money Makeover". Read it and follow it carefully. Go check out Dave's website as well. Yahoo is blocking the link for Dave's website for some reason. Guess they don't want people to use sound money methods?!?!? It is www . dave ramsey . com without the spaces

2) Hi ! are you thinking about securing debt against your house ?...if so this isn't a bad thing....if you are a serial borrower then this shows up in your credit file and if your application was referred then a underwriter will asses whether they think you are high risk or not. You just need to think about the implications- if you can't afford the payments repossession proceedings start after just two months of non payment. If you are comfortable with the new payments and will not start spending on cards again then this is a good solution you can take a rate where you are not tied in and can over pay if you wish, taking the overal costs of borrowing down.

3) Most if not all of these so called "debt consolidation" campanies are scams. They will trash your credit. What they do is not pay your creditors for months and then try and settle for less. It takes no special skills. They just dont pay them. If thats the route you need to go. Do it yourself and save the fees they charge and put it on the debt. Also, if they dont pay your creditors. You, and you alone are still responsible for the debt. Your creditors will sue you and not the company you hired. Go to daveramsey.com and listen to his radio show. He has lots of good advice on money and debt.

4) Now, there are 2 types of consolidating. A consolidation loan which is where you would get a loan and use this to pay off your debts. This is silly bc it will just move the money around. What i did --after research was a debt management program. It did not move the money around. It helped me by lowering my interest, paying one lower monthly payment and gave me great financial advice on top of that. THey helped me with looking at my budget. I received my statements every month so i saw that the payments were being made. What the man says earlier in the answers is referring to a settlement. Those are BAD news. Don't go with them. Check out debt counselign corporation--here is the link http://debtcounselingcorp.org

5) Don't consolidate your debts 1. It's like filing a chapter 13 bankruptcy to your credit score 2. You have some other company that you pay to pay your bills plus they charge money to you for it . 3. If you are in debt and want to get out there is one top selling author and radio host Dave Ramsey.

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