Sometimes life throws us a curve-ball. With the economic tragedy that we are currently experiencing, this is very common. Mistakes made in our youth, or paying bills with credit trying to make it in these tough times, can lead to a credit disaster. Sound familiar?
Bad debt consolidation may be right for you.
What steps should I take? You must first commit to researching your options. Before making a choice in debt consolidation, be aware that there are many scams in this arena. It is your responsibility to avoid these scams.
Watch out for the following:
Hard-money loans - If you already have credit issues, you may end up with an offer you seemingly cannot refuse from a loan agency. These loans offer to consolidate your current debt and lower your monthly payments. Be certain to read the fine print, these loans may make your payments smaller, but tend to come with a higher interest rate which will have you paying more in the long-run.
Balance-transfer cards - This also may seem like a good idea. A credit card company offers you a promotional interest rate to transfer over your old balances to their card. This is another instance where you MUST read the bylines. This promotional interest rate may only last a short while, and then you are stuck with another high-interest card.
Better options:
Debt consolidation services - These companies offer a case manager to deal with the creditors for you. In most cases, they can negotiate with creditors to lower your balance and have your debt paid off in 4-6 years. Most of these services do, however, include a monthly fee added onto your payment.
Why not contact creditors yourself? Accounts in collections are prime for negotiating a settlement. These companies want to get paid, without years of court battles. If you make an offer of a lump sum payment or lower monthly payments, they may accept.
Falling into the bad credit trap can be overwhelming, but there are many options available. Wouldn't it be great to alleviate a bit of the stress that falls on you each month from making these payments. Give the above options a try.
