Is debt consolidation a decent option? Our bills now overwhelm us, especially credit card debt. Is it to our advantage to think about debt consolidation?
Many credit counseling and credit repair agencies, in the experience of my clients, in fact do more damage than good. Some, again in my experience through my clients, are outright fraudulent.
The only credit counseling that you should really investigate is through the agencies that are approved by the U.S. Justice Department. You can navigate to a list of approved agencies by going on to the website for the U.S. Bankruptcy Court in your jurisdiction. Then, find the page for the U.S. Trustee. They will have a tab guiding you to approved credit counseling.
In my experience, through my clients, if something can be worked out, they will let you know and help you. If not, they will tell you whether bankruptcy is appropriate.
At that point, retain experienced local bankruptcy counsel to guide you through the complexities of the bankruptcy law and procedure.
Debt Consolidation: How it Works
Often debt consolidation requires large monthly payments. The agencies offering such services might claim the monthly payment to the debt consolidation agency is low. They’ll claim the payment offers lower monthly payment than what the individual or the couple would pay if they actually paid all of the monthly credit card minimum payments and other debts. That’s the appeal.
But often the agency will hold on to money paid and wait for the most aggressive of the creditors to come forward, making a deal with them. Others receive nothing. Some credit card companies refuse to deal with consolidation agencies. So, people who have been paying into the consolidation company find, after making a number of payments, that they haven’t gotten any further ahead with the majority of their debt than they were before shelling out all that money to the program.
Alternatives to Debt Consolidation
I have seen people work out their own consolidations, but it takes diligence and attention to all of the outstanding credit on pretty much a daily basis.
If overwhelming debt is that much of an issue, bankruptcy alternatives should at least be considered. Here are bankruptcy basics.
Here are more articles on bankruptcy and other topics.
When y0u shuffle a deck of cards the order of the cards changes. But the actual cards remain the same. People tell me their credit consolidation efforts achieved about the same result.