2 Major Debt Consolidation Traps That Can Worsen Your Financial Situation

A lot of people make the mistake of taking the plunge into debt consolidation without gaining necessary knowledge and as a result, they end up at the loser’s end.

Debt Consolidation Traps That Can Worsen Your Financial Situation

(Newswire.net — January 4, 2018) — Have you made up your mind to opt for debt consolidation? Well, you are lucky if you get your hands on a good service for debt consolidation but you need to watch out for the traps also. The mistake most people do is that they take a plunge into debt consolidation without gaining the necessary awareness. As a result, they end up at the loser’s end.

Traps to Know Before You Decide to Consolidate Your Debt

Going for a Payment Plan That Extends for Years Together

Now, most people feel very relieved when they decide to consolidate their debt. What most companies do is that they promise the fact that you will have to pay a low monthly payment. The truth is that this is a bait.

 You get quite pleased with the thought that you have to pay less, but the real trick is that these companies extend your payment period. At times you end up paying this monthly payment for years together,and yes you have to bear up with the fees that you pay to the company.

 The result is that you pay more than you owe. This is why it is important that you should review the payment plan before hiring a service for consolidating your debt. This way you will have a clear idea what is coming your way.

The False Debt Free Claims Made by Unreliable Debt Consolidation Services

Some of the debt settlement programs also want to benefit from your ignorance. They claim that they will negotiate one huge amount with the creditors. As a result, you will be debt free after 120 days.

The reality is quite different. The service holds your money in their own pocket till your creditor decides to charge off. The charge-off means that the creditor feels the debt is uncollectable,so they contact a collection agency for assistance.

 In some cases, the debt case may turn into an ugly legal case. What happens in this scenario is that eventually, the creditors are even willing to accept a very low amount. However, your credit score is ruined by that time.

This is why it is important you should seek the assistance of a debt consolidation service that has a vision and is willing to go the extra mile to help you in settling your debt.They should follow the transparency rule and should be willing to reveal the strategy they will use to settle your debt.

 Ideally, you should look for a debt consolidation firm that has been in the business for quite some time. This way you will be sure of the fact that the service has stood the test of the time and will be able to help you by all means.

The best approach is that you should go through the reviews of the company. The reviews will give you a clear idea about the opinion of the clientele and whether you should confide in this firm or not.

Source: http://newswire.net/newsroom/blog-post/00099318-2-major-debt-consolidation-traps-that-can-worsen-your-financial-situation.html