Debt-Consolidation-Questions

Debt-Consolidation-Questions

These are the most frequently asked Debt-Consolidation-Questions we receive. If you do not find the answers to your Debt-Consolidation-Questions, please Contact Client Services.

• How much money can I save consolidating my loans?
  The biggest savings with good debt consolidation is peace of mind. It is a means for people who would be struggling to pay their bills to be able to do so with the full support and cooperation of their creditors.The principle focus of a DMP is getting a person’s financial house back in order. When this is accomplished, people generally pay their bills more promptly, establish better credit and get out of debt faster. A result of many DMP’s is that many people save thousands of dollars by paying off their debt compared to how they would have paid off if not for the program. The reason for this is that creditors voluntarily reduce interest and eliminate late or over limit fees as part of the program. Since more of your payment is applied to what you owe and less is going to interest or fees, you get out of debt faster. Most people simply don’t realize how much it will cost to pay off credit cards by making only minimum payments. There is a very simple process that you can use to verify this for yourself, look at any credit card statement and: Determine the minimum monthly payment. Find the finance charge amount charged during the month. Deduct the finance charge from the minimum payment. What is left is what is being paid towards what you owe. If you divide this principal amount into the total debt, it will give you an approximation of the number of months it will take to pay back your debt. If you multiply this number of months by the minimum payment, it will give you an idea of the total it would take to pay your bills by making only a minimum payment. For most people, the payoff using this process is 10-15 years and the amount paid is almost four times what is currently owed! By comparison, most DMP’s, (if payments are made every month) pay off the outstanding debt in between three and five years at only 50% or so more than the current owed.
• What is Debt Consolidation ?
  Debt-Consolidation-questions can take many different forms. It can be getting a credit card with a large credit line to make one payment out of many. It can mean getting a second mortgage on your house to pay off unsecured debt, (or even refinancing with a first mortgage). It can mean going to a finance company for money to pay all of your bills at one place. It can also mean a process of eliminating debt through a specific process that recognizes that you have too much of a financial burden and need to reduce the amount you owe in order to restore your credit rating and restore financial balance to your life. All of the items mentioned in the first paragraph are forms of loans. If your objective is to buy something that you can’t afford with money that you don’t yet have, loans are a good option. If this is the type of debt consolidation you need, then there are large numbers of people who can help you. Of course, make sure you get proper advice and read all of the fine print before signing any loan documents. If you have more debt than you can handle, then borrowing more money probably isn’t your best solution. Debt consolidation through a non-profit credit-counseling agency may be. These programs work on the recognition that you have more debt than you can handle and that you need help in reducing the amount of money that you owe. If that is the case, then debt consolidation can help by: Putting all of your debts into one monthly payment. Stopping your ability to incur further debt in an effort to reduce the debt you have. Bring past due accounts current. Eliminate late or over limit fees. In many cases, lower the interest that you are charged. Only a trained professional can determine if a Debt Management Program, (commonly called a DMP) is right for you.

• Why can’t I just file Bankruptcy and erase my debts?
  In many cases you can. This is one of the Debt-Consolidation-Questions that a skilled financial counselor will discuss with you. The decision to file bankruptcy is usually a complex one. It revolves around such issues as your ability to pay, your plans for the future, the amount of debt you have and the actions that creditors may be able to take against you if you do not file bankruptcy. And there are some debts that are not erased by filing bankruptcy. In general, most people prefer to avoid bankruptcy if they can. There are cases where bankruptcy is the only viable alternative and others where it is totally inappropriate. The best rule of thumb is to talk to a skilled financial counselor who can help guide this decision.
• Why would my creditors be willing to lower my interest?
  This is a very common Debt-Consolidation-Questions. The most important determination in a Debt Management Program (DMP) is the determination that it is necessary. If you are satisfied that this is the best approach for you, then it makes al all the sense in the world that creditors would lower your interest. DMP’s are for people who are looking to reduce their debt because they have too much of it already. The DMP is an excellent way to: Regain control over our finances. Stabilize your finances by living on a cash basis. Reduce debt rapidly. Stabilize or improve your credit standing. Creditors are willing to work with reputable credit-counseling agencies who make realistic determinations about who needs to be in a DMP. Some creditors do their own, independent verification of the need for a DMP before extending lower interest and other terms. Some even will provide benefits on a sliding scale depending on the results of such an evaluation. Creditors also realize that they have invested in you to convince you to become their cardholder. They believe they will make more money from you in the future.
• Common Debt-Consolidation-Questions asked by many consumers.
  You didn’t get in debt overnight and you won’t get out that way either! Creditors call because their computers show your account is past due. The computer calls you and, when you answer, you are routed to the next available representative. As you can see someone has to reprogram the computer to get the calls to stop. This is usually done through a process called “re-aging”. Re-aging an account means, among other things, that it is brought back to current status. This is one of the biggest benefits of a DMP. When an account is re-aged, the calls will stop because the computer will no longer dial your number. The amount of time that this can take varies from creditor to creditor. Some creditors re-age with the first payment from a credit-counseling company; others require 3 payments. As soon as an account is re-aged, the phone calls will stop.? Debt Consolidation Questions ?
• Will credit counseling appear on my credit report?
  You may be pleased to learn that when enrolling in a debt management program, creditors look upon that favorably, as it shows them that you are making a sincere effort to pay off your bills. This in turn helps restore your credit rating, as by making your regularly scheduled monthly payment, it indicates responsibility and continuity in a payment schedule to your creditors. Only your creditors can report your actions to the credit bureaus. Creditor participation in our program and financial support of our operations are strong indicators that such a program will not harm your credit. By reducing debt and having the creditors report the payments received as prompt payments, most people who enter into a consolidation plan will actually improve their credit rating. Some creditors do report participation in a debt management program to credit reporting agencies. You should keep in mind that such reporting has many positive elements. Participants in debt payment programs cannot go further in debt. In addition, debt plan participants are paying creditors according to the creditors terms and conditions.

While we know you will have many Debt Consolidation Questions, We hope this page has been helpful answering your Debt Consolidation Questions.