Debt
Consolidation Loans are one of the most common solutions people
think of when they fall victim to financial problems. The sad
fact is that about 65% of people that obtain a debt consolidation
loan find themselves with a larger debt and deeper trouble than
they were before? The reason this happens is simple. You
Can Not Borrow Your Way Out of Debt, Before your Debts have
been Reduced by Negotiation !
Contact
Us first !
A debt consolidation loan ( before your debts have negotiated
reductions ) will not reduce the amount you owe but leave you
to pay 100% of the loan plus interest. This is not going to
get you out of trouble. When taking out a debt consolidation
loan you will be asked to secure the loan against some form
of asset. At this point you have just gone from an unsecured
loan to a secured loan and have put your personal assets at
risk. Many loans are spread out over a 30 year period leaving
you open to loss of these assets over the total period. If you
run into further difficulty at any time you can lose the asset,
normally your home.
Debt consolidation loan organizations get paid a big commissions
for signing you up into a secured loans to pay the credit card
companies back. What do you think consolidation loan organizations
are thinking about, your debt or the amount they can lend you?
The higher your debts the more money they make. Many people
end up finding themselves bound by a carefully worded contract
that can cause the consumer literally the loss of all the legal
rights provided by federal law and hold the loan company harmless
from most legal claims.
Some consumers have been mislead to believe that a home equity
debt consolidation loan might be a good idea due to the deductible
interest. The IRS is advising consumers that they are cracking
down on these and that the interest paid on home equity loans
for more than the market value of your home used to repay unsecured
consumer debt is not deductible.
We often hear horror stories from people saying that the consolidation
loan was the worst decision they ever made regarding their financial
future. Once the debts were paid off, they discovered they now
have a whole new line of spending power; empty credit cards,
and it was not long before these accounts were once again run
up to the max. This left them with both the consolidation loan
and other creditors to repay. If you were financially unable
to pay the previous debt how are you going to repay the loan
and creditors. This normally leaves you running back for a second
consolidation loan and the threat of losing your home.
We have heard of some credit unions cutting back on consolidation
loans for this very reason. They observed that once people obtained
consolidation loans they were getting back in debt again and
would return looking for yet another consolidation loan. This
is partly to blame with the loan company's who have no interest
in teaching you or even suggesting that you no longer use previously
damaging credit cards. There is no particular type of person
that falls into this trap and open to a wide diversification
of people form company presidents and doctors to lower income
families.
If you
are considering consolidation contact us first !
Credit
Counseling Services
Reorganization
plans used to be controlled by the CCC but due to recent court
rulings they no longer have a monopoly on the market. This has
allowed many new organizations to spring up in this area. Company's
running Reorganization plans are working for the creditor on
a commission based on the debt recovered from you. They are
not working for you but trying to recover the debt for your
creditors.
Credit Counseling and Reorganization companies let the
card companies know that you have entered into a hardship repayment
program. This allows them, in some cases, to reduce your monthly
payments and get up to a 50% lower monthly payment plan over
the total debt owed. They are not, in any way, reducing the
amount of debt owed. Most company's can also reduce the interest
on many of the cards and in some cases even eliminate it. This
may depend on your payment history.
Other benefits can include; re-aging the account, stopping late
fees and over limit charges and this, along with the interest
payment reductions, is where the savings are made - - so they
claim. You normally make just one payment to the Credit Counseling
or Reorganization company and they then disperse the money
to the creditors. At no point do they try and reduce the actual
debt. However, they do work, if you go with the right company,
and can help you pay off your debt quicker and save you money.
I have known many instances with Credit Counseling and
Reorganization companies, where the customer has ended up paying
higher monthly payments than the original minimum debt payments.
The customer is sold on the fact that they are only making one
payment.All well and good, but why would you want to pay a higher
monthly payment, even if it is only one?
A much better way to go is Debt Reduction. We take an aggressive
approach to your debt and not only reduce or eliminate the interest
like Reorganization plans but actually reduce the total balance
owed to the creditor. You owe $20,000 and pay only $10,000 or
less. We do not get paid by the creditor in anyway for recovering
your debt for them, but paid purely on a performance base from
you. If we do not save you money, we do not get paid. This creates
a association between as with you as our best cheerleader, as
we reduce your debt and the more we save, the better for both
of us.
Debt
Consolidation FAQ's Here
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