A family member asked me, "Should I use a debt consolidation company to pay off my debt?" My answer was no.
Everyday I see or hear about more debt consolidation companies offering that easy fix, but they can do more harm than good.
The debt consolidation companies that offer to help you pay off your debt are often rip-offs and can end up doing serious further damage to your credit score. Sometimes they even leave you with more debt then what you started with.
It's easy to get suckered in when you hear how much your payments can be reduced. The thought of all that stress going away just makes you want to pick up the phone right now.
The thing with most debt consolidation companies is they don't explain that they typically charge 10% of what you owe to take on your case. If they end up working out a settlement with your creditors, they will take another 10% of the amount they supposedly saved you.
The other thing is they don't exactly tell you the settlement they get for you will ruin your FICO score and could end up costing you income tax on the amount you that was forgiven.
A lot of times the debt consolidation company takes the up front fee and runs. Doing nothing to help you and ruining your credit further by promising to make your payments and never doing so. Thus, leaving you out the initial fee you paid to get started and potentially having your interest rates go up even further for non-payments.
There is no easy way out of debt. It's like losing weight, you can gain it really fast, but it's hard to take it off. Same goes for debt, you can pile it on really fast, but it takes time to pay it off.
Anyone promising you a magic bullet is not giving you the whole story. Remember if something sounds to good to be true it probably is.
We had several recent posts on a new program supported by many banks and credit networks called HelpWithMyCredit.org. If you are in trouble with your debt, I feel is this is great place to start.
One of the companies endorsing HelpWithMyCredit.org is the National Foundation for Credit Counseling. The network is a non-profit organization with trained accredited counselors who will evaluate your situation and help develop a plan for you to follow. The don't provide the magic bullet either, as we discusssed there is no easy way out. But the guys at HelpWithMyCredit.org and National Foundation for Credit Counseling are organizations you can trust. Go to NFCC.org or call 800-388-2227 or HelpWithMyCredit.org or call 1-866-941-1030.
Everyday I see or hear about more debt consolidation companies offering that easy fix, but they can do more harm than good.
The debt consolidation companies that offer to help you pay off your debt are often rip-offs and can end up doing serious further damage to your credit score. Sometimes they even leave you with more debt then what you started with.
It's easy to get suckered in when you hear how much your payments can be reduced. The thought of all that stress going away just makes you want to pick up the phone right now.
The thing with most debt consolidation companies is they don't explain that they typically charge 10% of what you owe to take on your case. If they end up working out a settlement with your creditors, they will take another 10% of the amount they supposedly saved you.
The other thing is they don't exactly tell you the settlement they get for you will ruin your FICO score and could end up costing you income tax on the amount you that was forgiven.
A lot of times the debt consolidation company takes the up front fee and runs. Doing nothing to help you and ruining your credit further by promising to make your payments and never doing so. Thus, leaving you out the initial fee you paid to get started and potentially having your interest rates go up even further for non-payments.
There is no easy way out of debt. It's like losing weight, you can gain it really fast, but it's hard to take it off. Same goes for debt, you can pile it on really fast, but it takes time to pay it off.
Anyone promising you a magic bullet is not giving you the whole story. Remember if something sounds to good to be true it probably is.
We had several recent posts on a new program supported by many banks and credit networks called HelpWithMyCredit.org. If you are in trouble with your debt, I feel is this is great place to start.
One of the companies endorsing HelpWithMyCredit.org is the National Foundation for Credit Counseling. The network is a non-profit organization with trained accredited counselors who will evaluate your situation and help develop a plan for you to follow. The don't provide the magic bullet either, as we discusssed there is no easy way out. But the guys at HelpWithMyCredit.org and National Foundation for Credit Counseling are organizations you can trust. Go to NFCC.org or call 800-388-2227 or HelpWithMyCredit.org or call 1-866-941-1030.
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