Credit Card Debt Consolidation
Choosing a Debt Consolidation Company
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If you have a lot of credit card debt you may be feeling overwhelmed. You may be thinking that if you could just simplify your life (and your debt) that you would be on the road to solving your problems. Sometimes that can be true. One way to simplify your debt situation, and potentially save yourself quite a bit of money each month in the process, is by consolidating your loans. In other words, combine all of your existing loans into one larger loan – preferably at an interest rate that is less than the average of the loans that you were paying previously.Often people accomplish this goal by taking out a home equity loan or a home equity line of credit and use the low-interest equity in their home to pay off high interest credit cards and other consumer loans. This can be a double-edged sword.Make Sure This is The Right Way For You to GoIf you feel absolutely confident in your ability to pay off your home equity loan or your home equity line of credit, then taking out such a loan to pay off your credit cards can be a smart move. However, there are a couple of things that you should keep in mind. If for any reason you cannot continue paying off your home equity loan you could lose your home. If you fail to pay your credit cards you may be forced into bankruptcy but you probably won’t lose your home. So do you really want to exchange a non-collateralized loan (credit card debt) for a collateralized loan (which potentially puts your home at risk)? This is not a question to be taken lightly.Secondly, once you pay off your credit cards you must cancel your cards. Putting them in your wallet or sticking them in a drawer and telling yourself you won’t use them again is not enough. You must destroy (cut up) the cards and you must write to each credit card issuer and ask that your account(s) be terminated. The only logical reason for you to fail to take this step is because somewhere deep in the back of your mind you plan to use the cards again…”for emergencies.”The problem with that is that you have already demonstrated that you have little control over your credit spending. If you ring up additional debt once you have put your home at risk, the cost could simply be too great.How do You Choose the Right Debt Consolidation Company?This is an important decision because once you start down the road of debt consolidation and you put your home at risk, any further slip-ups on your part could be disastrous. Check with the BBB (Better Business Bureau) and make certain that there are no complaints against any debt consolidation company that you are considering. Also, find out how long the company you are investigating has been in business. If it is less than 3 years you may want to steer clear, as many companies change names every couple of years in order to fool consumers into believing there are no complaints against them.Be Wary of Debt Consolidation Companies That Demand You Sign a Contract Instantly If you feel that you are being rushed or pushed into an immediate decision then terminate the conversation immediately. There are plenty of fish in the sea, as the saying goes, and you don’t need to be talked into anything and you certainly don’t need to be rushed into a decision that you might later regret. A good debt consolidation company should offer you plenty of free consultation and be happy to answer all of your questions. A legitimate company will be happy to supply you with written material that you can review at your leisure before making a decision. Find a company that will come up with a plan to get you out of debt within 3 years at a price you can afford. The sooner you’re out of debt the better for you. Ask if the company is accredited. The better debt consolidation companies are members of either the Association of Independent Consumer Credit Counseling Agencies (AICCA), or the National Foundation for Credit Counseling (NFCC).TSC Sources & Recommended Resources
