The Facts About Debt Consolidation
Debt programs such as debt consolidation, allow you to consolidate all your loans into one bigger loan, which has a lower interest rate, and therefore lower repayments. However, there are many debt consolidation programs to choose from, and some are better than others.
One company is Accelerated Debt Consolidation, Inc. This is a full service debt management firm, and provide high quality debt consolidation services. They specialize in reducing high interest rates, and are happy to give consumers a free quote. To find out more about their services, visit www.debtsynergy.com.
When looking at debt programs involving debt consolidation, you have to be very wary. There are companies who are in the debt consolidation business to make money for themselves, and may damage people's credit by offering them so-called assistance. To know whether the debt consolidation program you're looking at is trustworthy, watch out for companies that:
* Require payment by money order or cashiers check.
* Require account numbers before providing you with a quote.
* Offer many services like debt negotiation, IRS Help, credit repair and seem to be jack of all trades firms. Debt Consolidation is a specialized, labor intensive process when done properly. Firms that have branched out into all of these related services are most likely having trouble internally.
* Refuse to send you a client agreement regular mail and require fax only.
* Have you hold or call back to see if you are "approved". There are no approval requirements for debt consolidation other than determining whether the creditors that you have will be ones that will offer better terms, and whether you can afford the required payment.
* Use "servicing associates" these firms advertise on the internet and elsewhere and are just marketing or lead generation firms, they sell your name to other companies.
* Advise you to include accounts that already have low rates - see chart on payoff calculator.
* Advise you to include Student Loans in your consolidation. Student Loans already have low rates, usually 7.75% to 8.25% and do not offer more favorable rates for debt consolidation plans.
* Advise you to include credit union accounts with rates that are already low.
* Advise you to include the IRS. IRS debt must be handled separately from the rest of the accounts in the consolidation. Accelerated Debt Consolidation, Inc. can advise you on how to handle your IRS problem through the proper source.
* Quote a set interest rate like "between 0% and 10%" instead of quoting each creditors rate individually.
* Quote payoff times of "4 years" or "53 months" instead of giving you the individual payoff time for each creditor. When you have 7 creditors with 7 different balances and 7 different interest rates an answer like "4 years" or "53 months" is obviously coming from a telemarketers sales script not a Debt Management Professional. See the Payoff Calculator.
* Advertise "lower your monthly payment by 30 to 50%". There are no banks that still accept lower payments through credit counseling. Until November of 2003 Bank One/First USA was one that would accept 1% of the balance, they no longer accept 1%. Bank of America stopped accepting the 1% payment on March 25th 2004. These were the last 2 banks that accepted a lower payment.
* Offer "Cash Back Awards".
* Quote an unusually low monthly payment especially if you have gotten higher quotes from other companies and have substantial balances totaling $30,000 or more.
* Debt Arbitration Or Debt Negotiation Services - This Is An Entirely Different Service Than Debt Consolidation. These firms negotiate with creditors to reduce the total amount that you owe. This is never a viable alternative for consumers that wish to maintain their credit. What most debt negotiators don't tell you is that when they negotiate a reduced payoff amount, it is reported as a paid charge off or R-9 on your credit report and you will pay income taxes on the amount that the creditors let you off the hook on. In other words if a creditor settles a $10,000 debt for $5000, the $5000 is reported as income and you will be taxed on it. In addition, the account/accounts will be R-9 charge offs on your credit report. Debt Negotiation is never for consumers who are current on their accounts and want to maintain their credit. Click here for more info.
The moral here, in choosing debt programs such as debt consolidation, be very careful who you deal with. If you're not sure whether or not a company's the real deal, it might even help you to visit a financial planner or your bank to find out whether or not it's a legitimate service. Also, be sure to check companies up on the Internet, and see whether they've been rated negatively by other consumers.
The right debt consolidation company can save you years in paying off your loans, and may help to prevent bankruptcy and other problems that can occur when you get in over your head.
One company is Accelerated Debt Consolidation, Inc. This is a full service debt management firm, and provide high quality debt consolidation services. They specialize in reducing high interest rates, and are happy to give consumers a free quote. To find out more about their services, visit www.debtsynergy.com.
When looking at debt programs involving debt consolidation, you have to be very wary. There are companies who are in the debt consolidation business to make money for themselves, and may damage people's credit by offering them so-called assistance. To know whether the debt consolidation program you're looking at is trustworthy, watch out for companies that:
* Require payment by money order or cashiers check.
* Require account numbers before providing you with a quote.
* Offer many services like debt negotiation, IRS Help, credit repair and seem to be jack of all trades firms. Debt Consolidation is a specialized, labor intensive process when done properly. Firms that have branched out into all of these related services are most likely having trouble internally.
* Refuse to send you a client agreement regular mail and require fax only.
* Have you hold or call back to see if you are "approved". There are no approval requirements for debt consolidation other than determining whether the creditors that you have will be ones that will offer better terms, and whether you can afford the required payment.
* Use "servicing associates" these firms advertise on the internet and elsewhere and are just marketing or lead generation firms, they sell your name to other companies.
* Advise you to include accounts that already have low rates - see chart on payoff calculator.
* Advise you to include Student Loans in your consolidation. Student Loans already have low rates, usually 7.75% to 8.25% and do not offer more favorable rates for debt consolidation plans.
* Advise you to include credit union accounts with rates that are already low.
* Advise you to include the IRS. IRS debt must be handled separately from the rest of the accounts in the consolidation. Accelerated Debt Consolidation, Inc. can advise you on how to handle your IRS problem through the proper source.
* Quote a set interest rate like "between 0% and 10%" instead of quoting each creditors rate individually.
* Quote payoff times of "4 years" or "53 months" instead of giving you the individual payoff time for each creditor. When you have 7 creditors with 7 different balances and 7 different interest rates an answer like "4 years" or "53 months" is obviously coming from a telemarketers sales script not a Debt Management Professional. See the Payoff Calculator.
* Advertise "lower your monthly payment by 30 to 50%". There are no banks that still accept lower payments through credit counseling. Until November of 2003 Bank One/First USA was one that would accept 1% of the balance, they no longer accept 1%. Bank of America stopped accepting the 1% payment on March 25th 2004. These were the last 2 banks that accepted a lower payment.
* Offer "Cash Back Awards".
* Quote an unusually low monthly payment especially if you have gotten higher quotes from other companies and have substantial balances totaling $30,000 or more.
* Debt Arbitration Or Debt Negotiation Services - This Is An Entirely Different Service Than Debt Consolidation. These firms negotiate with creditors to reduce the total amount that you owe. This is never a viable alternative for consumers that wish to maintain their credit. What most debt negotiators don't tell you is that when they negotiate a reduced payoff amount, it is reported as a paid charge off or R-9 on your credit report and you will pay income taxes on the amount that the creditors let you off the hook on. In other words if a creditor settles a $10,000 debt for $5000, the $5000 is reported as income and you will be taxed on it. In addition, the account/accounts will be R-9 charge offs on your credit report. Debt Negotiation is never for consumers who are current on their accounts and want to maintain their credit. Click here for more info.
The moral here, in choosing debt programs such as debt consolidation, be very careful who you deal with. If you're not sure whether or not a company's the real deal, it might even help you to visit a financial planner or your bank to find out whether or not it's a legitimate service. Also, be sure to check companies up on the Internet, and see whether they've been rated negatively by other consumers.
The right debt consolidation company can save you years in paying off your loans, and may help to prevent bankruptcy and other problems that can occur when you get in over your head.
posted by Ahri22 at 10:26 PM
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