Tips for Implementing a Debt Consolidation Service

By: Jon Arnold

If you are over your head in financial obligations, you need to consider some type of debt consolidation or payment reduction program. You hopefully know that you cannot continue to go deeper into debt and defaulting or missing payments every month. That may work for awhile, but it is a downhill spiral that only accelerates.

What happens if you are trying to avoid the inevitable is that as you are starting to go under from a financial standpoint, the late fees start adding to the speed of your downward spiral. Then there is the stress involved because you are getting phone calls from the collections department. It can get to the point where you even hate to hear your phone ring anymore.

You need to get a plan in place and take action immediately. The longer you wait, the more difficult it is going to be, as well as the longer it will take to get you back on track. A debt consolidation and payment reduction service can be of great help to you if this sounds like the position you are in. You may have thought of getting a personal loan, but that is like pouring gasoline on a burning fire and only makes the problem worse, or at best will delay the inevitable.

You may have also thought about bankruptcy, but you need to realize that there are many drawbacks to this approach, especially since the new bankruptcy laws were put into place recently. If you elect the chapter of bankruptcy that wipes out your debts, you could also lose all or most of your assets at the same time. There are also certain kinds of debts like tax liens and federal student loans that cannot be discharged via bankruptcy.

By contrast, a debt consolidation and payment reduction company will work with you to handle your bills. It is not credit counseling, although they may also offer that service. You turn over your bills to them and mutually decide what you can afford to pay every month, then you make ONE payment to them each month, and they distribute that payment to your many creditors. They will work with your creditors to lower your monthly payment as well as lower your interest rate, sometimes even being able to waive any late fees

The end result of all this is that say you had $2000 a month going out to satisfy your bills before, but now with the services of this company, you only need to pay a significantly reduced amount, maybe something like $1200 a month. This will hopefully give you the financial breathing room you need to get your act back together.

Note that if you do not make the payments to the debt consolidation and payment reduction company, they will not make the payments to your creditors either, so if you are going to use their services to reduce your monthly payments to something that you can handle, make sure you do not default on your payments to them. Doing so would only put you back in the same situation again, only worse.

Debt Consolidation
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