Credit Card and Car Loan Debt Consolidation

Why is debt consolidation services becoming so popular?

The main reason is our inability to live within our means. People generally get a rush when spending money. It has been said that it is similar to a high that drug users get when they take substances. Now just as there are consequences to drug use there are obviously problems associated with overspending especially when it comes to consumer debt.

What is a normal person to do when they find themselves over their head, drowning in debt?

When you find yourself in this situation there is only a few things you can do.

1. Win the lottery- now we all know this isn't going to happen, but hey a guy can dream right?
2. File for bankruptcy- This is a very serious matter because once you file for bankruptcy you will have that on your credit record for at least 7 years. This would cause you to pay insanely high interest rates when you establish any new lines of credit. Over the years this option would cost you a ton of money!
3. Use a debt consolidation service couple with a debt management solution.

So what exactly is a debt consolidation service?

It is a two part equation. There is the actual debt consolidation and then a management solution (or managing of the consolidation). The way a debt consolidation works is all your debt would be lumped together . Then the debt consolidation company would enter into negotiations to get rid of late fees, lower interest rates and get you the best possible terms.

Once this is done the Debt consolidation company would work on a payment plan so that you can afford to pay these debts off in a timely fashion. This also impacts a person by improving their credit score which we all know is the key to being able to have low interest rates and obtain lines of credit.

Both the debt consolidation service and the management are intertwined services and do not serve as stand- alone products. This is very important because without the management aspect it is proven that most people fall back into their old ways sinking farther into the black abyss of debt.

Credit Card Debt Consolidation Loans

The term debt management consolidation refers to a process where all of your debt is lumped together with the help of a debt management company. Then they negotiate with your creditors to lower your interest rates, and lower or eradicate your late fees and over the limit fees. They also work out a plan with you that fits your budget to repay the debt. This plan is used to negotiate with your creditors to get them to lower the rates and fees.

One of the best parts of debt management consolidation is that almost everyone can use the service. It does not matter if your credit is or good or bad or even thinking of filing bankruptcy.

The Benefits to Debt Management Consolidation

1. Single low monthly payment for all debt
2. Increased credit score- which enables you to obtain credit in the future
3. Stress relief- Instead of worrying about piling up bills you can rest assured that the plan will work to get you out of your current situation

Now that you are on the right track with your debt management consolidation another very important aspect of the process comes into play: Debt counseling. This is a very important aspect of debt management. They go through with you and go over appropriate management of existing debt and guide you in how to pay them off. Then they go over your spending with you. A budget is designed and they ask you to follow it specifically.

With the economy going through the present slump and the average American barely scraping by, debt management consolidation is becoming a very valuable service. There are many firms out there just search in your yellow pages or online. Just make sure you research a few companies until you find one that you feel comfortable with.

Credit Card Debt Consolidation Services Online

Credit card debt consolidation is a choice for those that find themselves with many monthly credit card payments to keep an eye on and payments that tie up a huge portion of their available money flow. Many firms offer free quotes that might guide you as to the IRs offered, term of the loan and the total interest amount you would be paying for the loan.

After making an exhaustive comparison of deals and offers by different firms, select a firm that may offer you testimonials of clients that you can confirm and that have no beefs registered against them with the local BBB. To grasp if your credit card debt is OK for consolidation you want to gather some info. Also, add all other costs and charges applied to the balance as well as those charged whether or not the balance is 0.

By doing this you'll be in a position to include on a single sheet all your debt so you can check them at a peek. With this info you may have an overall idea of how costly each debt is re interests and charges and you'll be able to compare it with the consolidation loan quotes that you're going to need to ask next to keep going with the relative process. Credit card debt consolidation loans can be made thru standard banks like banks and credit unions, or they can be made without delay thru credit card debt help associations.

Swift action should be taken when making an application for a credit card debt consolidation loan thru a credit card debt help organization once the choice has been made. A real free debt consolidation firm will formulate a credit card debt reduction plan that's custom made for your current position as well as offer other services like credit support and debt management services.

Well qualified credit advisors of these firms will review your present position and help you figure out a budget. So you would be conscious of your monthly revenue as well as costs and you may learn how to live in your means. This way, the firms not only help you for debt reduction but also help you not to get encircled in the swamp of curving debt.

Any Online Debt Consolidation Service That are Worthwhile?

This is a fair question. No one wants to become a victim of a scam or enter into business dealings with a financer that is less than desirable. However, the way to answer this question is with a question: are there any honest and legitimate brick and mortar consolidation agencies out there?

This question may take a few people off their guard. Most people will not apply the same stringent criteria to brick and mortar service that they would to an online business. This is why it is important to point out an obvious fact that escapes many of us: there are good brick and mortar debt businesses and there are poor ones. An on-line debt consolidation services can offer the same quality or lack of quality that a brick and mortar business will embody. The key is simply to perform the right due diligence to make sure the online service is a reliable one.

A poorly operated on-line debt consolidation service will not be able to stay "hidden" for long. A quick review of the Better Business Bureau's archives would reveal if any complaints have been lodged. Also, running a simple Google search of the service's name could probably turn up information. Again, word will get around if a company is not a reliable one.

So, to answer the initial question, yes there are excellent debt consolidation services online. In fact, many of them have helped people get out of horrible financial finds. As such, their value can not be overstated enough.

By the way, by researching and comparing the best debt consolidation companies in the market, you will be able to determine the one that meet your specific financial situation, plus the cheaper interest rates offered. Nonetheless, it is advisable going with a trusted and reputable debt counselor before making any decision, this way you will save time through specialized advise coming from a seasoned debt advisor and money by getting better results in a shorter span of time.

Why You Should Avoid Debt Consolidation Loans

If you have a lot of creditors you owe money to, you know what a hassle it is to pay numerous bills every month. You are probably also looking for a way to lower your monthly payments.

A lot of people facing this dilemma look to debt consolidation loans as their savior - but before you apply for one there are some things you should know.

First of all, you are likely to owe MORE than when you started due to the fees that are stacked on to the loan by the debt consolidation company. Additionally, you are just moving the debt and not paying it off.

So you may lower your monthly payments, but in the end you are likely to owe more and possibly a whole lot more.

Also, if you have less than perfect credit or you are late with any of your payments you more than likely going to face higher interest charges. Those that need a debt consolidation loan the most are typically the ones that get charged high interest rates.

Debt consolidation loans can also ding your credit. Applying for new credit will lower your credit score. Also, by rolling over your debts you are closing the old accounts, which will also affect your score.

If the loan dictates that you negotiate a lower balance or "deficiency balance" with your creditors, you will harm your credit because you are asking the creditors to accept less than what you owe. This will be treated as a late payment on your credit score.

Debt consolidation loans do not address the problem. Nearly 90% of the time people take out these types of loans, they don't change the behavior that got them into debt and they turn right around and go back into debt.

You should stay away from debt consolidation loans period. The only way it might make sense is if you were facing bankruptcy. Outside of that, steer clear. The negative ramifications truly outweigh the benefits. The best way out of debt is through intense sacrificial budgeting, developing a game plan, and sticking to it.