Is Debt Consolidation For You?
by: Talbert Williams
Want to pay all your bills with one check? Debt
consolidation may be the answer. It's not a loan or bankruptcy but a program,
run primarily by nonprofit organizations, that helps reduce interest rates,
eliminate late-payment fees and lower payments. |
With consolidation plans, organizations
such as Consumer Credit Counseling Services and Myvesta.org arrange for you
to pay off your debts within three to five years, although it may vary depending
on your needs. That's a pretty attractive idea, considering it takes the
average person 10 to 20 years to make credit balances disappear. However,
participating in a consolidation program could affect your ability to get
new credit or a loan because some creditors will put a red flag to lenders
on your credit report. Here's how the plan works:
1. After giving a program counselor the account
names, numbers and balances that you want to combine, she will help you work
out a budget and determine how much you can afford to pay toward your
debts. |
2. The consolidator will then contact your creditors and work out payment
arrangements. (Most consolidators charge up to 15 percent of your monthly
payment to cover program costs.)
3. You make a monthly payment directly to the
consolidator, who will pay the creditors on your behalf.
4. The accounts placed in the program are frozen
until they are paid in full. To learn more about debt consolidation, go to
http://www.1debtfreedom.com.
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