If you have thousands of dollars in outstanding debt, getting sound sleep at night is difficult. Those who are overwhelmed by the thought of owing different amounts to a wide variety of creditors may find peace of mind by getting assistance from a debt consolidation agency. Before you determine that debt consolidation is the right strategy for you, remember to choose wisely and read the fine print in your contract.
Check Your Credit
Study your credit and get a good idea of where you stand financially. Not every situation calls for consolidation and you cannot possibly make an informed decision if you don't know the effect the debt has had on your credit. Don't think of debt consolidation as a way to avoid dealing with your finances. Figure out exactly how much you owe and to whom the money is owed first and then consider whether consolidation is a viable option.
Find A Trustworthy Company
Not all debt consolidation agencies run an honest business and not all will prove helpful to your efforts at simplifying your debt. Don't just pick the first company you come across in the phone book or online; do your research first. Check the Better Business Bureau to see if the company in question has a good reputation among its customers. It's also important to establish when the agency started operation to ensure you are dealing with experienced professionals.
Pay On Time
Once you have made the decision to consolidate your debts, make sure all your payments are received on time. A missed or late payment undermines whatever positive effects you received from consolidation in the first place. If you are not prepared to make timely payments on your debt, there is no sense in seeking a consolidation agency to assist you. Lumping all your debts into one does not make your life any easier if you don't plan on paying.
Pay More Than The Minimum
Debt collection agencies are in business to help you, but they also need to make money off of you to stay active. Be aware of interest rates in the debt consolidation process and increase your monthly payments as much over the minimum due as possible. This lowers your principle amount due, resulting in a lower interest rate on your remaining debt. Read the fine print in your contract, however, as some agencies charge a prepenalty clause that works against you if you pay over than the minimum.
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