Is Debt Consolidation for Me?

Being in debt stirs negative emotions like shame, frustration, and hopelessness. You are likely to feel more stress, worry and anxiety when grappling with the dilemma of how to meet your financial obligations each month. First, take heart in the fact that you are not alone. Globally, millions are struggling with these tough economic times. Next, begin taking control of your debt, instead of letting it control you.

Debt Consolidation in Few Words

Debt consolidation is an option for many people suffering from escalating bills. A debt consolidation company will give you debt help by reviewing your situation through a free debt counseling session. They will then prepare an income expenditure analysis to find out how much you can afford as a monthly payment on your debt.

How Debt Consolidation Works

The money you have remaining after paying your other monthly expenses will be used to pay off your debt. The debt consolidation company will negotiate with your creditors to reduce the amount you owe, sometimes getting the creditor to waive fees. You will then pay the debt consolidation company one monthly payment. That means fewer bills and no more phone calls from creditors looking for late payments.

Pros of Debt Consolidation:

The advantages of debt consolidation are many. You can let go of your worries, knowing the single monthly payment is covering all of your debt obligations. Instead of multiple bills, there is just one. In addition, the payment has been based on what you can afford. This helps to keep you within your budget and avoid getting into trouble again in the future.

Debt consolidation also saves you money in interest and late fees. Typically, debt consolidation loans have a much lower interest rate than credit cards.

The best part about debt consolidation is that it gives you a second chance. Once you have breathing room, you can look at your spending habits and make adjustments to keep you on track in the future and maintain control of you debt and spending.

Cons of Debt Consolidation:

Debt Consolidation is not for everybody and you should not be approach it lightly. If you are having problems paying your credit cards and debt due to a “temporary” situation (loss of job, reduction of income, etc) contact your credit card company first. They should be able to work out a payment plan for you. Also ask them to waive any late fees that they have or plan to impose on you.

Debt will probably show up as a negative item on your credit report. You will not pay the total amount that you originally agreed (you accepted the fees and changes on interest when you sign the dotted line, even if didn’t read the fine print). You will pay a much lower amount from 30 to 60% of the original balance.