May 15 2008
Debt Relief Consolidation May Not Be Financially Viable
In a lackluster job market many people find themselves unemployed or underemployed often making far less money than when the started accumulating a lot of debt. Now that the income has shrunk and they are seeking some sort of debt relief consolidation may seem like a logical way out of their current dilemma. In the past, many companies offered their services to consolidate people’s debt into one monthly payment, usually less than combined payments, but a few bad apples made a mockery out of debt relief consolidation and have faced charges of bilking money from people who could least afford to lose.
The concept of consolidating a person’s debt is not new and has been used by many people to help them avoid bankruptcy and face the loss of their home, their car and more importantly their self-esteem. With debt relief consolidation, all of the person’s individual debts are consolidated into one loan and a monthly payment is made on that loan until the debt is resolved.
Some companies, instead of offering loans, will contact lenders and negotiate for lower balances on the owed debt and then accept a payment from the debtor and make small payments to each creditor. In this type of debt relief consolidation, the individual accounts remain open and if the debtor opts out of the plan, in most cases, the balances revert back to their original amounts.
Some Debtors Have Been Taken For A Ride
Some of these companies have met with consumers and promised them all sorts of ways to get them out of debt. Typically, the debt relief consolidation service required an upfront administrative fee to get the ball rolling on their case and with promises of low down payments, people handed over their cash. It was not until their creditors continued to call them and tell them they have not received any money that the consumers became suspicious. Attempting to reach the company they may have found they went out of business and left town with their money.
When looking for a debt relief consolidation company, check with the local Better Business Bureau about any possible complaints against them and also check with the state Attorney General for any known problems. Also, when meeting with someone to discuss debt relief consolidation always make sure the fees and any administrative charges you have to pay are identified and spelled out in the contract. The fees could end up costing more than paying off the debt on your own.
Related posts:
- Debt Relief Consolidation May Not Be Financially Viable
- Staying Away From Bad Consolidation Credit Debt Relief Programs
- Staying Away From Bad Consolidation Credit Debt Relief Programs
- Finding Debt Relief Loans Can Be An Expensive Proposition
- Finding Debt Relief Loans Can Be An Expensive Proposition
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While every person’s situation is unique and there are many options, a couple ideas continue to hold true:
1) High interest credit rates are expensive and long-term balances continue to drain consumers resources while generating income for credit-card companies.
2) If possible, transfer or settle those balances to a lower interest rates
3) Always research the options before making a selection to make sure you understand the difference between your choices and you select one that is right for you. There are differences between debt settlement, debt negotiation, and debt management.
And, you are absolutely right, bad-debt write-offs from credit cards are reaching record highs.