No one likes to have overwhelming personal debt. Excessive debt leads to a low credit score and for some people, being forced to file bankruptcy. Debt consolidation can help a lot of consumers avoid bankruptcy and a lot of stress related to having a high debt load. Here are a few tips you can use to consolidate your debt yourself or with the help of a professional service.
Debt Consolidation Tips
- Contact your creditors: Just contacting your creditors often opens doors to lowering your monthly payments. Many creditors are happy to help debtors who are trying to pay off their debt. If you have credit cards and the monthly payments are too high, speak with the companies involved to negotiate a lower rate. Many times these companies are willing to work with you because they would rather get some money than lose it all.
- Whats dragging your credit score down? Get a copy of your credit report before you decide about debt consolidation You first have to know where your debt came from before you fix it. Know exactly how much you owe and to whom you owe it to. It will be hard to create a budget if you don’t know where your money has been
- Are they licensed? Find out if your debt consolidation agency’s counselors are licensed. They should be properly certified. Is your counselor legitimized by working for a reputable company? This can help make your decision easier. There are some individuals that have started businesses as professional debt negotiators. Be careful with them. Some of them have been legitimately trained while others are just trying to make a fast buck. These people can end up doing more harm then good! Utilize services like Yelp to research anyone you choose to work with.
- Non-Profit? – Don’t choose a consolidation firm because they are not-for-profit. It is a common misconception that this label indicates a firm is a step above the rest. You can easily check to see if the company is reputable by contacting the BBB, or reading their reviews on Yelp. If they are new, ask them for references. You don’t want to be their “test subject” !
Bottom line is there are a lot of companies online that state they can help you consolidate your debt. Its up to you to do the research and validate their legitimacy.