By Manuel Tovar, July 14 – Hispanic Solutions Group
Some of those companies are legitimate, but using such consolidation services can be very risky. If you are thinking about the debt consolidation, you may want to consult a credit counselor.
As is known, many people get into debt because they cannot make the monthly payments to cover the debt, in addition to having to pay daily expenses. If you are not sure which one it is the best way to manage your debts our credit counselor can also help you explore your options.
You can also contact your creditors to see if there is any way you can lower your payments. Some creditors may be willing to accept lower monthly payments or change their monthly due date because they would rather receive less, but on a regular basis, than not be paid at all.
You will have seen many advertisements for these debt consolidation options, such as:
- Non-profit credit counseling
- How to Pay Your Debt Using a Debt Payment Plan
- Transferring debt to a zero or low interest credit card
- How to get a debt consolidation loan
- How to get a loan based on home equity, among other ads, in different media
Learn more about advantages and risks of each of these forms of debt consolidation to avoid getting into some troubles that are cumbersome
Finally, we alert you that there are many companies that advertise debt consolidation services, however, in practice, many of these are debt settlement companies. A debt settlement company might try to convince you to stop paying your debts and instead pay a special bill. This company can then use this money to try to negotiate with creditors a reduction in the amount of principal that you would have to pay.
Debt negotiation can be risky for the following reasons:
- Failure to pay creditors will show up as a negative transaction on your credit report. This could make it even more difficult for you to get another loan.
- If you don’t pay your debt, creditors may hire collection agencies to collect your debts.
- This could end in a lawsuit.
- As long as you do not pay your debts under the debt settlement plan, interest and surcharges will continue to add to the amount you owe. Therefore, even if your creditor (such as your credit card company) is willing to accept a lower amount than you owe, that amount could have grown anyway because of interest and surcharges.
We invite you to follow our social networks: LinkendIn, Facebook, Twitter and Instagram to find more information related to finances. Also on our YouTube channel The Credit Channel to learn how to improve your credit. If you need help in repairing your credit, disputing debts that do not belong to you, or other services, call us at (612) 216-1599.