Consolidate Debt and Avoid Bankruptcy

By: Joseph Then

Sometimes a person may get in over their head and find that they have spent more money they their monthly income will allow them to pay back. This can put them in a scary place financially. Wanting to avoid having to sell their home or vehicle, or to go bankrupt the answer is often to consolidate debt.

The most common way for this to be done is for the person, or the couple, to go to a service that will assist them to consolidate debt and find the best method to pay it off. These services will help to negotiate with the companies that are owed the money and to set up a program to pay the debt off. The client will no longer have to make individual payments to many different companies. They will instead make one payment to the service and these services will pay out the creditors. It is common for this monthly sum to be up to fifty percent less then when individual bills were being paid.

The key here is that the creditors want to be paid and so after a debt consolidation company contacts them with a payout plan they are usually willing to make concessions as long as in the long run they get paid. They are often able to lower the payment and lengthen the time available to pay the out the debt without any additional interest or penalties.

Companies understand that if a person who owes them money has gone to the trouble to consolidate debt with a service it is because they are trying to pay off the monies they owe and so are likely to be more cooperative with the debtor. A sign of good faith goes a long way. They also realize that if they instead push the person into bankruptcy that they will get nothing and that defeats the purpose of trying to collect their money.

To have a service willing to help you there will be a few things that they will demand. Typically they include conditions like you must be employed; you must owe more than two thousand dollars and have been unable to make payments in over sixty days. The kind of debt you have incurred can be through over extending your credit cards, unsecured personal loans or medical bills.

Once arrangements are made the debtor will send one payment monthly to the service. This service to consolidate debt for the debtor makes the individual payments as agreed with the creditors.

Once the debts are paid the service will get in writing statements from all creditors that the debtor has satisfactorily paid them off according to the agreed terms and nothing further is expected.

Bankruptcy
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