What to watch out for
Posted on November 6, 2007 at 2:30 pm
I think debt consolidation can be a good idea but there's a few things to watch out for.
1. Research the company before going with them. There's some shady "non-profit" business out there.
2. Keep a close eye on the fees. The debt consolidation company shouldn't be putting you further into debt.
3. Don't listen to the "lower your monthly payments". This just prolongs your debt. You're after lowering your interest rate, and applying as much as possible to the debt each month.
4. Do NOT put your house up as collateral. If you can not pay for whatever reason, you can now loose your home.
Posted on November 6, 2007 at 2:30 pm
Debt consolidation companies make their money off of fees, so you're right about keeping your eye on them about that. If it'll help you in the long run, great! But if not, find another company.
sigs
Rep Points: 505
Posted on November 6, 2007 at 2:30 pm
you need to look out for one sign on all those offers they give out. look out for this sign ' * ' . if this sign is there above any word, then its a trap. read carefully at the bottom of the ad in this case .
Posted on November 6, 2007 at 2:30 pm
Very good points. You should read the entire agreement very carefully, but read the * parts several times. :-) These companies make their money off the interest from the loans too. The fees are just bonus for them.
Posted on November 6, 2007 at 2:30 pm
very good points, some company just for their own profits,they don't t think of you , so you shoud think twice befour doing.
Posted on November 6, 2007 at 2:30 pm
I still think this is something you can do on your own. If you are not taking out a debt consolidation loan and are just negotiating with your creditors as a last ditch attempt to avoid bankruptcy you can call them and negotiate a plan yourself. If you explain to them that the only alternative is bankruptcy you will be surprised at how they are suddenly willing to help. Most of the non-profits are just making phone calls on your behalf.
Posted on November 6, 2007 at 2:30 pm
The other really important aspect is that once you get the money, you stop doing the things that got you in debt in the first place. If you are going to grab the credit cards with all those zero balances and start charging again, you have made the problem worse, not better.
Posted on November 6, 2007 at 2:30 pm
Debt consolidation is like restructuring your loan in such a way tha you have more flexibility in paying off your debt. Committing the same mistakes will put you in big trouble.
Posted on November 6, 2007 at 2:30 pm
[QUOTE=kittykittylala;1264]Dont ever make your home a collateral, I understand that most people think that getting a consolidated loan would help them lessen the burden. However, how would you feel loosing your home because of bad debts?[/QUOTE]
The problem is you could also lose your home if you default on certain debts and they put a lean on your house. Sometimes you just have no choice.
Posted on June 8, 2008 at 10:26 am
What if the company merges and you didnt know it was coming? Is there any way to guarantee that the fees and interest you were paying will stay the same or is it up to the company? I just worry about things changing halfway through to entirely different terms than I agreed to.
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