Getting rid of debt is a lot harder than getting in to debt. For many people, debt may seem overwhelming. There appears to be no escape from it. However, there are options available that can help dull the edge of debt. One of these options is debt consolidation. Essentially, debt consolidation is a program that involves hiring a company to combine your debts in to one low monthly payment for you. Here are some of the ways that debt consolidation can benefit you.
Reduced Interest Rates and Fees
In many cases, a debt consolidation company will be able to reduce interest rates and fees on your accounts. This means that each account restructures debts in an effort to make them manageable for you. This can be done with both original creditors and collection agencies. Once the debt negotiation takes place, you are likely to not see any more fees added to your accounts. Existing late fees can also be reduced or eliminated.
One Monthly Payment
Instead of tracking down multiple accounts, you only have to worry about one. When you enroll in a debt consolidation program, you give the company a list of your accounts. They handle the negotiations. All you have to do is make one monthly payment to the debt consolidation company. They distribute it to your creditors. You are given monthly statements to show where your money is going. Having to make only one payment is appealing to many people.
When you are in debt, you know how stressful it can be. You receive tons of letters in the mail. Even worse, you receive constant phone calls. This can lead to aggravation and embarrassment. When you sign up for debt consolidation, the calls and letters will stop. As part of the negotiation, most creditors and collection agencies agree to stop contacting you. If they do, you can refer them to the debt consolidation company. This relieves a lot of stress when it comes to debt.
Raise Credit Score
This is a long term benefit of debt consolidation. Late payments and collection accounts cripple your credit history. As you make payments to your debt consolidation program, you will see modest increases in your score. Once you have a creditor completely paid off, that debt will be reported as paid. It is also possible to have the negative item removed. Since most collection agencies are happy to get their money, they may reward you by deleting the negative item. That will significantly boost your score.
Eliminate Debt Faster
The monthly payment is designed so that you are able to pay it each month. In most cases, the monthly payment will be higher than what your minimum credit card payment will be. That means you will get out of debt faster. Also, you can pay more than your monthly payment to accelerate the process. A debt consolidation company will tell you exactly how long it will take to pay off your debt. That is comforting to know for many people. If you want to pay it off faster, you can increase your payments.
In general, debt consolidation is a great option for many people. Companies will offer you a free consultation. Once you complete this, you can decide if the program is right for you. There are clear benefits to participating, but it is always best to get all of the information before making a commitment.
This guest article was contributed by Jane Sanders from Debt Management. Read her articles about debt consolidation to learn more.a great option for many people. Companies will offer you a free consultation. Once you complete this, you can decide if the program is right for you. There are clear benefits to participating, but it is always best to get all of the information before making a commitment.
This guest article was contributed by Jane Sanders from DebtManagement.net. Her site exists to give you honest information before making any debt consolidation commitments.
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