Debt-Go.com

The best way to deal with debt is to pay it all off on your own. This isn’t always possible, however, due to constantly changing circumstances that may at times not even allow you to pay the minimum payment on monthly bills.

Debt consolidation is a solution sought out by many debtors who are in too deep. This can be achieved by transferring all debt to a low-interest credit card, or by taking out a home equity loan. There are also debt consolidation or credit counseling services that consumers can utilize.

How do these services work?

Debt consolidation services work together with your creditors to help make your debt more payable by canceling fees that have been charged to your account because of late payments or charging over your credit limit. These agencies can also get credit card companies to lower your interest rates. If you decide to use a debt consolidation service, you will pay them directly and then they forward your payments to the creditors you owe.

The pros

If you’re unable to negotiate lower rates and payments with creditors on your own, a credit counselor can usually do it for you. This will save you money and help you get your debt paid off more quickly. The credit counselor can also help you write a budget to help you stick to the payment plan while still being able to afford all of your other expenses.

Cons

Despite all efforts from credit counseling agencies, some creditors simply refuse to make the changes necessary to bring your monthly payments down to an affordable level, especially if you owe a lot of money. If this happens in your case, you will have to try to find another way to pay off your debt or, if the circumstances demand it, file for bankruptcy.

Another thing about credit counseling is that it isn’t free. Credit counseling agencies may charge monthly fees for their services, adding them on to your monthly payment. If they don’t, they have to get the money to pay their employees somewhere. That “somewhere” is usually from your debtors, as a percentage of your payment.

Using a credit counseling service to eliminate your debt does appear on your credit report, but will not necessarily reflect badly on your credit. Some creditors view Chapter 13 bankruptcy and credit counseling programs to be basically the same thing. While you are eliminating debt by means of such a program, you will not normally be extended any additional lines of credit.

Just like any other business, there are some credit counseling services that should not be trusted with your money. You can check the Better Business Bureau for information on which agencies are best. Use that information to make an informed decision about which agency to go with.

Credit counseling may be able to help you get your debts paid off. But it is important to consider the pros and the cons of entering such a program. Trying to work out a deal with creditors on your own may work, eliminating the need to get a third party involved.