TRUE OR FALSE: DEBT CONSOLIDATION IS THE “NON-PROFIT” COMPANIES THAT “HELP YOU” TO GET OUT OF DEBT? You’ve seen the ads on TV on how they will help to “lower your payment” and “help get you out of debt faster” and other eye catching stuff. To “consolidate” means to take a number of things, like credit cards, and make 1 payment out of them, thus, you consolidate your payments to 1 payment. So what does that mean to you regarding your debt, and especially your pocket book?
THERE ARE BASICALLY TWO FORMS OF DEBT CONSOLIDATION:
1) Taking your credit card debt, taking out a second on your house and putting all the credit card debt on your house. That way, per the ads, you can “pretend” you are out of debt! Which of course, you aren’t. You just took the debt and rearranged it so you didn’t see it every month, so it looks like it’s all gone.
2) The “non-profit” debt consolidation companies. These are the other ads you see on TV and are basically companies that are set up to help you pay off your debts by lowering your interest rates and your monthly payments.
But, DO THEY REALLY DO ALL THAT?
Do you remember when 10% interest rates on credit cards seemed outrageous? Do you remember when 24% interest was only given by people we called, Loan Sharks?
Well, it looks like times have changed! Now, it’s the banks and credit card companies that have become the Loan Sharks.
The non-profit Debt Consolidation companies are touting the 9 – 10% interest rates like they are giving you the biggest gift possible so you can really get out of debt fast.
WILL DEBT CONSOLIDATION GET YOU OUT OF DEBT?
Did you know that after 40 years of being in business that 18% of the people that go into the non-profit debt consolidation companies actually get out of debt? That means 4 out of 5 people do not finish the program.
In 10 years of being in the Debt Negotiation business, I have found that the biggest reason people quit the non-profit companies is because they don’t see their balances go down enough to get them out of debt in 3 to 4 years.
Do you know how the non-profit companies and the banks and credit card companies work together? Check out the next article on the Debt Consolidation companies. You might be quite surprised!