Everything You Ever Want to Know About Debt Consolidation Plans
Debt Negotiation has become the most popular method of handling debt. In the past few years trillions of consumers across the globe have accumulated debt in the form of credit cards, unsecured personal loans, hire purchase agreements and so on. Many individuals do not make their monthly bills as required. When monthly payments are late regularly a person will find that they slide even deeper into debt. Neglected monthly payments lead to financial penalties being imposed on individuals which makes the amount of debt even bigger. In order to turn around the situation a number of men and women select a Debt Settlement Company to eliminate their outstanding debt. These are provided by dedicated Debt Consolidation Companies that know that often times folk’s credit commitments are more than they can deal with alone.
Maybe it seems the financial strain of your debt obligations is never going away and you are considering turning to a Debt Negotiation Company. Top 5 reasons to consider a Debt Relief Business:
oYou have one or more outstanding unsecured debt which you can not afford the payments. This might be because of losing your job or other changes in your budgetary condition.
oConstantly you wake up to find more and more inquiries from your credit card companies and you have begun to ignore certain letters because you believe your position is hopeless.
oYou have been unable to get home equity lines of credit in the past and you think you have nowhere to turn.
oYou can’t stand the phone ringing as it is a credit card company calling to talk you into paying on one of your outstanding credit agreements.
oYou are finding it almost impossible to sleep due to the stress of the outstanding credit agreements you have built up killing you. Most days you are constantly concerned by thoughts of how you will catch up on the outstanding credit cards.
These are just a couple of the signs that you may want to want to consider a Debt Assistance Organization to take care of your outstanding balances.
Picking a Debt Reduction Business can be tough. Thank goodness, there are quite a few ways you should use to find the good from the bad. Avoid the ones that make promises that sound too good to be true. You are never going to be debt free in less than a year or two. This is just not going to happen. The outfits that tell you this simply want you to sign an agreement with them.
Always Ask These Questions Before You Employ a Debt Management Business
How Much Does the Service Cost and When is the payment Collected?
Most Debt Management Services receive 15% to 20% of your total debt as a fee for their service. This compensation is based on the amount of debt you have when you enroll in the service and is taken up front. With the business’ upfront payment coming out in the first 12 to 18 months, most of what you pay into their service is taken by them as fees. Once they have collected their fee there is no compulsion for them to do their job.
With a bona fide Debt Consolidation Business you only pay a small admittance fee to go onto the Service, so what you pay into the Program is actually untouched and not eaten up in fees. The settlement fee is based on the amount forgiven by your creditors. This means the fee is calculated on the amount the organization saves you. The business should only collect a settlement fee once a settlement has been completed. This will allow you to get out of debt much more quickly and gives the organization compulsion to get you the best possible settlement!
Can the Debt Settlement Company Stop the Creditors From Contacting Me?
No Debt Management Programs can promise they will end all creditor calls. That is simply not feasible. Anyone that claims they will is not telling the truth.
Will The Debt Negotiation Plan be making monthly payments to the Credit Card Companies?
The Collection Agencies are not paid anything until an acceptable settlement is reached and agreed to. Therefore, Debt Consolidation Plans do not make recurring payments to the credit card companies. That is genuinely how the plan works. Any Debt Negotiation Organization informing you otherwise is not telling the truth.
Can I be sued?
A creditor can always sue you. If you are told something else, a red flag has just been raised.
Will This Have a Negative Effect on my Credit Score?
Contrary to what some people think or believe, all debt reduction services will have a negative effect on your credit score. Consider this, you are in debt and are not paying as agreed. The debt negotiation program is meant only as a management tool. However once your debt has been settled, your accounts will show a $0 balance and you can begin the process of rebuilding your credit score.
When Will I Receive My First Settlement?
While this is different in every case, your first settlement should be made within the first 12 months from the beginning of your program. More than 12 months is unacceptable and the company that informs you of this is probably not a good match for you.
Where will the Funds Kept While you are Waiting on a Settlement?
This is a very good question. Your money must always be held at a third party escrow company that is FDIC insured. Any company telling you to save your own money or to send the money to them is more than likely not the one for you. If you plan on settling your debt, you will need to have the money on hand to pay the credit card companies when the settlement is reached.
These questions are suggestions. The most important point is to ask questions and get all the answers to those questions. With your questions answered, you can find the Debt Consolidation Service that is best for you.
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