by Harriet Bond
(San Francisco, CA, USA)
Bob did all the right things. He studied hard in high school, earned entrance into a good college, and earned his B.S. in Political Science with a teaching certification in four years. Upon graduation, Bob landed a teaching job at high school, with full benefits and a decent salary.
But Bob needed a car to get to work, and wanted to furnish his apartment, so he went into a bit of debt. All of a sudden, a few years later, Bob’s bills began stacking up, and he missed a few credit card payments. And just like that, Bob’s credit card interest rates and minimum monthly payments shot through the roof, which made it impossible to pay bills each month.
Fortunately, for Bob he talked with a few friends and was introduce to the idea of debt consolidation.
After finding a quality debt consolidation program, Bob was able to consolidate his auto loan, college loans, and credit card loans into one monthly payment, which saved him hundreds of dollars per month, and made it possible for Bob to make ends meet again. Also, it put him on a definite path toward becoming debt free. In the program Bob found, he needs to make this monthly payment for 5 years, and he will completely debt free.
How Debt Consolidation Works
If you have found yourself in a situation similar to Bob’s, debt consolidation may be the answer. The process is rather straightforward, but it can work a few different ways, depending on the company you decide to work with.
Here are the two primary ways debt consolidation works:
• Company XYZ pays off all of your debt, and then you repay them at a lower interest rate and monthly payment. The benefit for you is lower monthly payments and the benefit for the company is the interest they will earn as you pay back your debt.
• Company XYZ negotiates on your behalf with all of your creditors and locks in a lower interest rate and monthly payment. They then require that you pay them a flat monthly payment, and then Company XYZ pays each of your debtors in turn. The benefit for you, again, is lower monthly payments. The benefit for the company is the fee they will charge you each month, which is generally dependent on the amount of your debt.
What to Look For In A Debt Consolidation Program
Not all companies are of the same level of integrity and transparency in the debt consolidation space. Therefore, make sure you are dealing with a reputable firm. There are scores of shady companies in thedebt consolidation space.
The best way to make sure you are dealing with a solid company is to take the following steps:
• Check the Better Business Bureau for complaints against the company and the BBB rating.
• Stay away from new companies. They may be a good company, but let others take the risk. Search for programs that have a long track record of success.
• Check online user reviews. This is probably the single most important thing you can do.
• Check for exorbitant hidden fees. Make sure you fully understand all the terms and conditions of the agreement.
Debt consolidation may be the best path to reach your goal of being debt free. Make sure to conduct strong due diligence by following these steps, and you could be well on your way to achieving your financial goals.