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| Are Debt Consolidation Services Worth It? |
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| The purpose of debt consolidation services is to take all of your unsecured debt
(which is usually credit card debt) and consolidate it into one loan that you
make monthly payments on. The idea is that with one loan and in most cases one
lower payment you can gradually become debt free. They will most likely convert
your unsecured debt into secured debt by having you put your home as the
collateral on the loan. Debt consolidation services seem to be a way out when an
avalanche of credit card debt buries you. But are they worth it? You might be
amused when you see their ads and they say they are nonprofit. But think about
it. They have to make their money somewhere or else they cannot stay in
business. Don't believe that nonprofit claim for a minute. In fact you should
carefully consider if you even want to waste money you don't have on a debt
consolidation service. There are numerous reports that these agencies are under
litigation for suspicious practices. Some have even been reported as taking the
first month's fees you pay to them and applying it to their own administrative
fee resulting in the payments not getting paid for the first month to the
creditors. From one point of view, credit card companies are glad to get
something from you in terms of repayment of your credit card debt through a debt
consolidation agency. But don't think that any of them are looking out for your
best interests. They just want to make money. Stop and analyze why you are here
in the first place. You have to seek out debt consolidation because of poor
money management. But in reality you are only making the problem worse because
you are spending what money you don't really have on a third party who claims to
be helping you. They are not helping you. If they were helping you, then the
cost to you would be totally free. Understand this: If you are only 30 days
behind on a credit card payment, it is not time to seek any outside help. Even
if you attempt to pay something to the credit card company it is better than
nothing. Save what little money you have to directly paying your debt. If the
credit card company is relentlessly phoning you then turn off the ringer and pay
what you can. You can go online and pay and never have to speak with a person.
Remember, this is unsecured debt. When there are so many debt consolidation
agencies with bad reputations, it is wise to avoid debt consolidation like a
minefield. Take some time and do some research on the companies. Remember that
the Better Business Bureau really does not provide enough conclusive information
on a company to allow you to make a decision. They only provide a record of the
number of complaints. Some of these companies change their names all the time
and it is hard to track them. Hold on to your hard earned money and use it
directly to fixing your debt problems. Remember there is no quick way out of
debt no matter what these consolidation companies claim. Throwing away your
money on them is just not
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