Consultation and Rate Quote
Many consumers desiring to be debt-free turn to debt consolidators for help. A debt consolidator's first step will be to set up a consultation with you. At that time, the consolidator will look at your debt and provide you with a free analysis and rate quote. As a rule, reputable debt consolidators will offer this consultation for free, so be skeptical if asked to pay for an initial consultation. It is also important to remember that "nonprofit" does not mean free. Many nonprofit debt consolidation service providers must charge some type of fee in order to cover their costs, so do not be surprised when you are given a rate quote by a nonprofit agency.
Negotiating With Creditors
If you agree to work with a debt consolidator, his initial task will be to contact your creditors and negotiate lower interest rates and the waiving of late fees and other charges. If a creditor is being contacted by a professional debt consolidator he will know that you are having some financial difficulties. If you alleviate these difficulties by filing bankruptcy, the creditor may not be able to collect any of the money you owe. As such, creditors are often willing to give up some fees or interest in lieu of losing the entire amount owed.
Formulating a Plan
After negotiating with your creditors, the debt consolidator will come up with a payment plan to get you out of debt. The consolidator will formulate this payment plan with you, taking into account what you can afford, your personal goals and the needs of the creditors as per the previous negotiations. This plan will consolidate all of your monthly payments into one payment to be made to the consolidator. The consolidator will then divide this payment out among your creditors as per the plan. Make sure you understand the debt consolidation plan: Some consolidators will manage your payments for you while others will actually pay off all of your debt and issue you a debt consolidation loan. It is important that you understand exactly what is happening. The consolidator should be able to tell you exactly what your monthly payments will be and how long it will take until you are debt-free. Once the plan is in place the debt consolidator should be able to stop any collection calls you may have been receiving.
An Ounce of Prevention
A good debt consolidator will help you formulate and follow a plan for getting out of debt. They will also provide you with credit counseling. Credit counseling will help you to better understand how credit and debt work and how they affect your credit score. Counseling will also help you to learn how to make good spending choices and avoid being overwhelmed by debt again in the future.
0 comments:
Post a Comment