Consolidating Debt - Financial Debt Consolidation Ripoffs

Pay Off Loans Faster. Low Interest Rates - that is the buzz.

The fact is that actually the debt consolidation company gets benefited from this one. They buy - yes buy - a lower interest rate from the company you owe money to by negotiating settlement of thousands of dollars of debt. You are charged a fee for this service and a monthly fee after that.

The debt consolidation company pays off your loan quicker, you don't. You keep paying them in its place.

If you thought making regular payments by your due date was expensive, try making ONE LOW Payment every month.

These companies only buy bad debt to reduce the interest. They will buy collections of debt - thousands of dollars of debt from a company to get the lower interest rate - plus they get a percentage kickback from your financing company to reward themselves for payment of that loan.

Debt consolidation scam fees are included in your monthly payment - So practically you pay as much as you might have if you had sent that extra payment to your loan company and paid off your higher interest rate credit card faster by adding that extra fee to your payment every month. Actually, you pay a bit more.

They don't re-negotiate your payment date. That means that they pay everyone's installment at the same time, once a month.

If they pay out on the 15th of the month and your payment was due on the first, then your credit will take a 30-day late payment once a month - every month-on all three of your credit reports. Late payments remain on your credit history for 7 years (or more time). Feeling good now, I'll bet!

That's not over. You could also be one of those individuals whose payments get omitted once in a while - Yes it happens all the time with Debt Consolidation practices.

Negotiation is something you can do yourself. If you just hate speaking to these people you can even approve someone you know and trust to negotiate a lower interest rate for you on your behalf. If you can't get anywhere negotiating with the very first person you talk to, ask to talk to a supervisor. If you can't get anywhere by the third supervisor, you're caught.

- Negotiate your own lower Interest rate

- Stretch out your repayment schedule

- Pay off the highest interest debts First and add more money

- Write 2 checks: One for the least payment and One for any additional money with a mention in the memo that reads: "Principal Only Payment." This one simple action can save you tons of money. If you don't state this, your money is automatically applied to the interest and you'll pay more interest for a longer period. Yeah, that really sucks, but not for them. For you.

- Figure out - there are freely available debt calculators all over the web - what it would take to pay your highest interest cards first. I plugged in my own and came up with the fact that if I add $60 a month to my minimum credit card repayment, I can have a $1300 debt paid in 12 months with $66 interest.

- If I carry on with the minimum payment, It can take more than 6 years and cost me over $2500. Actually that one action on my part put over $1134 back in my pocket - in one year. And I did it personally. Without debt consolidation fees!

I don't recommend any debt consolidation firm. They prey on your despair and the doom and gloom of the length of paying out your credit cards at minimum payments.

Search This Site