Posted on August 25, 2009 at 12:38 am I am considering debt consolidation as a means to pay off all my debts and I want to know of it's effects on me and my credit. What are the pros and cons to debt consolidation?

Posted on August 25, 2009 at 1:35 am Pros: * Debt consolidation's effect on your credit report is not as bad as filing for bankruptcy.* You are given an opportunity to pay your debt little by little.* In the case of debt settlement, you won't be paying for the actual amount that you owe with your creditor.Cons:* Collection calls will not stop once you're on a debt consolidation program.* Being enrolled in a debt management program will be indicated on your credit report, which may spell trouble for other creditors.* Not all debt consolidation companies can be trusted.

Posted on August 25, 2009 at 2:48 am If i have a debt consolidation program running, I also have to pay a fee, right? How about the non-profit ones? How good are they in terms of the services?

Posted on August 25, 2009 at 3:02 am You still have to pay a fee regardless of it being for-profit or not. That typically will be $25-30 monthly for the non-profit credit counseling agencies, in particular.Don't be fooled--not all debt consolidation companies, particurly debt settlement organizations, are non-profit.

Posted on August 26, 2009 at 1:55 am Why would they still charge me if they are non-profit?How does debt consolidation appear on my credit too?

Posted on August 26, 2009 at 4:21 am Some of the pros and cons to debt consolidation also include having lesser interest rates. If you opt to take a debt consolidation loan, or a home equity loan in particular, the interest rate that you will pay will be lower than the typical interest rates on the market. That's because the debt is secured, meaning there's collateral attached to it. Which means, if you have nothing to pay your creditor, they can just easily take your home.

Posted on August 26, 2009 at 9:20 am What are the pros and cons to debt consolidation? That needs to be broken down further as every debt consolidation option has pros and cons. For example, to name just a few: Debt consolitation loans are helpful because they allow the person to make one simple monthly payment instead of many. But often they are extended at high interest, and sometimes the lender requires collateral, like a home equity loan. Credit counseling has some pros- for example, the debtor can pay back their debt at a lower interest rate. But a con would be the fact that not all creditors agree to work with these agencies. And the debtor has to remain current on monthly payments, so those in need of monthly relief could have a tough time. Debt settlement pros include the potential for lower monthly payments and high savings, while cons include a ding to the payment history and dealing with collection calls.