Debt Consolidation Services - the Good, the Bad & the Ugly

#1. You can refinance your home - What you'll be doing here is extending the length of the obligation. This will lower your monthly payments and make them more manageable. However, in the long run you'll likely be paying more money. Just because your monthly obligation will be lower than before, that money must still be repaid. All that's happening here is that the money has been placed on the "back end" of your loan. This makes your monthly obligation lower, but in the long run your interest will be greater because you've extended the length of time to repay the debt. It's wise to only do this as a last resort.

#2. You could try getting a Debt Consolidation Loan - You need to be careful doing this. Some companies out there that say that they'll help you with consolidating your bills, even with less than perfect credit, but some of these loan companies may charge as much as 25% interest or more. You may give yourself a bit of breathing room by consolidating everything into one manageable payment, but you may be paying a huge amount of money in the end by doing this. Once again, only use this as an absolute last resort.

#3. Consumer Credit Counseling - There are agencies that will call your creditor's for you and get them to modify your monthly payment. Some of these places are supposed to be non-profit organizations and this may be true, however, it does not mean that they're not charging you for the service. There's simply no way that they could stay in business without collecting fees from either you, your creditor's or both. Non-profit does not by any means that it's a no cost service. Do your homework before using these types of services.

#4. You can do exactly what those companies above do. Get on the phone and call your creditor's directly. Some of them will be patient, understanding and appreciate the fact that you were decent enough to contact them, rather than having to find you. Some companies will let you defer your payments for a short time by making a lower payment instead of the regular amount due. If you can get control of your finances within six months or less, you probably won't have too much of a problem getting your creditor's to work with you. After all, these people are aware that by sending you to collections they'll probably get less than what the original amount of the debt was. They also know that if you file Chapter 7 Bankruptcy, that they'll likely get nothing at all, so working together with you and accepting less for a few months just makes sense.

A good piece of advice is to do all you can to try to live within your means. It's not always easy to do because things always spring up out of the blue, but do your best to put away a set amount out of each paycheck. Also, only have one credit card and even then for emergencies only. Don't carry it with you, unless you're out of town. It's too much of a temptation that will easily get big before you know it. This is the bottom line - save money, use cash only, use credit only when when it's necessary and you'll prosper in the long run and lead a pretty much stress free existance.

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About the Author:

Has your personal debt become too much? Are You Aware Of Your Options? Joe Stewart is a former Insurance agent that has experience with Debt Consolidation and Bankruptcy Proceedings. Get more information by visiting TheDebtConsolidationGuys.com (TheDebtConsolidationGuys.com/) or by clicking on Bad Credit Debt Consolidation Loans (thedebtconsolidationguys.com)