Before You Join the Debt Consolidation, There Are 5 Things You Need To Know
Now, more than ever, is the time to get out of debt and end the financial stress! You don’t need to continue to feel the weight of the obligation of debt on your shoulders. Not only does it affect your life, but the lives of those around you – family, work and friends.
But, the question is, should you use the Debt Consolidation programs that you have seen in ads on TV, heard on the radio or from your friends?
There are a few points to watch out for when looking into the Debt Consolidation programs:
1. They work for the banks and credit card companies, not for you!
The banks and credit card companies invented the idea back in the late 1950s of having non-profit companies collect money for them. It’s really a great gimmick – use the non-profit status to collect money from the public and the banks get a tax write off for donating money back to the non-profit companies as a payment for collection.
The monthly fee that you pay to the Debt Consolidation company does not cover their overhead. They need to get money from the banks and credit card companies so they can survive! Think of it, there are 100,000s of consumers using the Debt Consolidation companies and that requires a lot of staff, phones, and other overhead.
The main source of income to cover the rising cost of expenses comes from the Banks and credit card companies, NOT FROM YOU!
2. The Debt Consolidation companies never negotiated an interest rate with the banks or credit card companies in their life!
The banks dictate what those interest rates will be and the Debt Consolidation companies go along with it.
The banks, credit card companies and Debt Consolidation companies even share the same software. That makes it easy for the organizations to communicate and share information with each other. It means that when it comes to deciding what the interest rate will be that is charged to the consumer, it is set up through the software program by the banks and credit card companies.
When those interest rates change, they are changed by the banks and credit card companies, not by the Debt Consolidation companies!
3. Only 18% of the people who have started the Debt Consolidation program complete it.
That’s after 40 years of servicing the public. That means, 1 out of 5 make it through the program.
Because the Number 1 reason for people dropping out of the program is that they don’t see their debt going down like they thought it would. Their balances are not going down at the expected rate and this worries people.
4. The length of time it takes for a person to complete the Debt Consolidation program is 6 – 8 years.
You may have been told that it will take 3 to 4 years to complete the program based off the amount of money that you will be paying every month.
I remember doing the math with one soldier that lived in Texas. It turned out that he wasn’t going to get out of his debt for 8 years and he was told he would be out in 4 years!
5. Several credit card companies will not participate in the Debt Consolidation program!
That’s right! Doctor’s offices, clothing stores, jewelry stores, Department Stores may not want to lower their interest rates.
You need to find out what creditors are willing to work with you on the Debt Consolidation program. For example, if your debt has been sold to another company that new company will most likely not want to participate in the Debt Consolidation program. That means, if they are charging you interest, that interest rate will not go down. That also means, you will be on the program much longer than you had thought.