Debt Consolidation Agencies - Credit Counselors
Using a debt consolidation agency counselors was the 1st thing I tried in reducing my debt. I went through a local agency which was great, because I had to meet
with them monthly or quarterly to go over my progress and make sure I wasn’t creating more debt.
The debt consolidation agency requires you to list all your bills past due and current as well as your regular household bills. You are also asked to bring in all your credit & department cards. The one I went to cut up my cards in front of me. You will then make one monthly payment to the agency for all the bills you consolidated, as well a small fee for their services. The fee you pay them is nothing compared to the monthly payments in interest and late fees you may be paying to your credit card companies. The nice thing about these agencies are they combine all your blls into one monthly payment making it easier for you to pay your regular monthly household bills and 1 consolidated bill for all the past due credit card and other loans (this does not include your home and/or auto loans). The other nice thing is these companies work with the credit card agencies to reduce and in some cases have no interest charges on your credit cards. These new interest rates are in effect as long as you continue to work with the credit counselors agencies. But of course there are some credit card agencies that refuse to work with the credit agencies, but most will work the agencies especially if they know you are really serious about paying your bills.
Yes, going through a debt consolidation agency will mess with your credit, but if you’ve gotten to the point you have to use one then chances are your credit is already a mess.
Don’t use a debt consolidation agency and then create more debt because you now have more money to spend or think I can now take on another bill. Remember that’s what got you into the mess in the 1st place, spending more than we make. To create more bills/debt is just undermining your getting out of debt. Remember the goal is to have no debt. If you find you have extra money at the end of each month or paycheck, how about starting an emergency savings account. By saving some money in an emergency account you’ll have money available to cover that broken appliance or auto repair and not need to make more debt. Try saving $500 to $1,000 into this savings account for such emergencies. Once you have that much saved up then put any extra money towards paying down your debt quicker.
If you are going to use a Debt Consolidation Agency, again I suggest using a local debt consolidation (credit counseling) agency, they help you stay on track with your monthly/quarterly visits and if you have a problem you have a real person to talk to. On the news the other day they were talking about the online debt consolidation places, the ones you sign up for on the internet. They were talking about the problems folks were having, this is a good example of why going through a local agency is more advisable, you have a problem you can go in and talk to someone in person. One lady they were interviewing was saying how she hasn’t heard from the agency she signed up with for over a year. She was talking about how they haven’t really helped her, other than consolidating the debt into one payment, and she was paying them a monthly fee.
I used the local credit counselors for about 2 years until I felt I could take on my own bills, as well as I wanted to clean up my credit (remember using the counselors did not allow this yet).
By going back on my own, any credit cards with outstanding balances, the interest rate went back on. So if the Credit Counselors had it agreed to with the credit card company to charge no interest, the interest rate was put back on. So in that sense it was a bit of a drawback. But I had my finances under a little better control and I was determined.
So I decided to pay the highest interest bills/debt first, because that’s what all the financial people said to do. The reason they encourage this is because you are paying more in interest on these bills and feel you will save more in the long run. So did that work for me? Read on....
Paying Off Your Highest Interest Debt First
Paying Off Your Lowest Balance Debt First
Cleaning up Your Credit
Return from Debt Consolidation Agencies to Get Out of Debt
Return from Debt Consolidation Agencies to Home
Start Small and Watch Your Savings Grow
It is better to have tried and failed than to fail to try.