Posted: Mon Aug 20, 2007 11:20 am Post subject: What exactly is debt consolidation and what do I have to do
I have 34,000 in debt from credit cards including a home equity loan (which is also credit card debt, now in a different form). I saw a debt consolidation calculator which said I can Save 13,600 off my debts. How is this possible and how does one qualify for this?
In order to qualify for debt consolidation all you have to have is an income and willingness to payoff your debts.
They will collect the money from you and use that money to work out an arrangement with your creditors.
That being said debt consolidation is one of the worst thngs you can possibly do to your credit and the service that they do for you is nothing that you cant do yourself.
Here is how this works in a nutshell. They manage your debts and /or bills. Once you sighn up with them they call your creditors and tell them that they are working on your behalf and to communicate with them. So that stops thouse pesky calls from your creditors. However your bills still go past due and your credit gets ruined. Now when a debt consolidation gets enough money from you to pay one of your bills they contact the company and offer a settlement. They pay off your bills at 50-80 cents on a dollar hence saving you money on the total that you own. But the truth of the matter is anytime you are more then 3-4 months past due on your bills you can call a company yourself and they will most likely settle with you. And most companies settle as low as 40 cents on the dollar once you are 6 months past due as at that time the bill is charged off to profit loss.
The reason why debt consolidation is a good business is that they collect interest on all that money that you keep giving them. In most cases bancrupsy is less of a hit to your credit and allows you to be rid of your debts completely. _________________ Eugene Volovik
Branch Manager
Team USA Mortgage
612-481-3127
Conventional, FHA and Commercial Lending
Consolidating debts means that all your unsecured debts will be consolidated and converted into a single debt. And the interest payment on that debt will be lowered. As a result, you will be able to make less monthly payment.
And to qualify for the debt consolidation, you must have a steady source of income.
The purpose of Debt Consolidation is to lower your payments and lower your interest rates on that debt so you can pay it down sooner and more efficiently. If you use the equity in your home to refinance and consolidate debt you may also benefit from preferred tax deductable interest. Credit card Interest is non-preferred interest because it is not tax deductable. Generally the lowest interest rates you will find are in home mortgage interest rates. This is because it is a secured loan. Your home is the collateral. Credit Card debts are unsecured loans, and unsecured loans generally carry the highest interest rates. Our firm provides a detailed debt consolidation report with every mortgage refinance we do. This report shows you all the numbers to determine if debt consolidation is the best choice for you. A good mortgage planner should have one of these programs to do a report for you.
Hope this info helps,
Mike Snider
"www.PayItAllOff.com"
I was told that debt consolidation is bad. The consolidators negotiate with your creditors but in the meantime the creditors won't stop calling your house. I was told this by a lender when I first attempted on getting a refinance last year to pay off some cards and a car loan. I even talked with a debt consolidator who wanted $400 some dollars from me to get this started and I didn't have that much to give anyways. Whether it was scam or not, I don't know.
I was told that debt consolidation is bad. The consolidators negotiate with your creditors but in the meantime the creditors won't stop calling your house.
I don't know why the lender said so but it is not true. After the consolidation program starts creditors do not call for their money.
I personally feel that you got scammed by that particular debt consolidator as a debt consolidation do not generally charge money to start the process of consolidating. They charge a fee for the process. But that is charged after the process is done.
I personally feel that you got scammed by that particular debt consolidator as a debt consolidation do not generally charge money to start the process of consolidating. They charge a fee for the process. But that is charged after the process is done.
It seems that they have really cheated you.
I should have been more specific. I almost got suckered. When I had made the call she informed about the process and everything sounded good until she said that she needed the first payment of $400 some odd dollars to get started or whatever. I told her that I didn't have the funds. I said I would get back with her but never called her back. Thats why I'm iffy about these places that do debt consolidation.
Yeah the best way to debt freedom is to pay on your bills whatever you can afford. These companies that are so called "debt consoidation" are just scams and preying on people who are having difficult time. Its like this, if I have $400 upfront to pay to get something like this started, I wouldn't need to talk to a debt consolidator in the first place.
These companies that are so called "debt consoidation" are just scams and preying on people who are having difficult time.
I cannot completely agree with you on that. There are some companies which are like that but some good companies also exist. The thing is to select properly. If by mistake you contact a bad company then you are in problem.
notime1208
