| Being heavily in debt can be extremely stressful. It | | | | about three years. |
| hurts even deeper when you have multiple creditors | | | | A good credit counselor will also negotiate with your |
| to deal with at the same time. Some people opt to | | | | creditors and can often get your interest rates |
| consolidate debt through a debt consolidation service. | | | | reduced and late fees waived. But this does not |
| But how does debt consolidation work? | | | | happen right away. You have to demonstrate your |
| You've seen the commercials on TV and heard them | | | | ability and willingness to keep your end of the bargain. |
| on radio. That debt consolidation is so heavily | | | | This means making timely payments for at least |
| advertised in the mass media means one thing, it is | | | | three consecutive months. |
| good money-making business. And this is the reason | | | | You will mail your new single monthly payment to the |
| you should be careful. But let's first look at how it | | | | debt consolidation company, who will in turn disburse |
| works, shall we? | | | | the funds to each of your creditors. |
| Debt consolidation simply means combining most or all | | | | You will also be required to close your revolving |
| your debts so you now have one payment to worry | | | | credit accounts such as credit cards, and not establish |
| about instead of several different ones with different | | | | new accounts for the period of the plan. |
| due dates. This can be good, especially for your own | | | | There both positive effects and negative effects of |
| peace of mind. | | | | debt consolidation. Positive effects include possible |
| When you sign up with a debt consolidation | | | | interest rates reduction, not having to worry about |
| company, you are assigned a credit counselor. The | | | | multiple accounts, and the possibility of becoming free |
| counselor will go through your finances with you and | | | | of debt down the road. |
| offer different options for getting out of debt, or at | | | | Negative effects include possible negative impact on |
| least easing your debt burden. These options typically | | | | your credit score due to closing some accounts, |
| include consolidation. | | | | restricted access to new credit, and ridiculously high |
| Assuming you've opted for consolidation, all your | | | | fees that some companies charge. Look out also for |
| debts get combined into one and a monthly payment | | | | scam credit consolidation companies. |
| is calculated that is supposed to clear your debts in | | | | |