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Combining Debt - Frauds In Debt Consolidation
Settle Loans Faster. Low Interest Rates - that is the hype.
The fact is that basically the debt consolidation company profits from this one. They buy - yes buy - a lower rate of interest from the company you owe money to by negotiating settlement of thousands of dollars of debt. You are charged an amount for this service and a monthly fee after that.
The debt consolidation provider pays off your loan faster, you don't. You keep paying them rather.
If you thought making regular payments by your due date was expensive, try making ONE LOW Payment monthly.
These companies only buy bad debt to minimize the interest. They will buy sets of debt - thousands of dollars of debt from a company to get the lower interest rate - as well as they get a percentage kickback from your financing company to reward themselves for payment of that balance due.
Debt consolidation scam fees are built into your monthly payment - So in the real world you pay as much as you would have if you had sent that extra payment to your financing company and paid off your higher interest rate credit card quicker by adding that additional fee to your payment each month. Actually, you pay more.
They don't re-negotiate your payment date. That means that they pay everyone's debt at the same time, once a month.
If they pay on the 15th of the month and your payment was payable on the first, then your credit will take a 30-day late payment once per month - every month-on all three of your credit reports. Late payments stick on your credit history for 7 years (or more). Feeling good now, I'll bet!
That's only a few. You could also be one of those individuals whose payments get skipped once in a while - Yes it takes place all the time with Debt Consolidation procedures.
Negotiation is something you can do by yourself. If you just hate talking to these people you can even authorize someone you know and trust to reconcile a lower interest rate for you on your behalf. If you can't get anywhere negotiating with the first person you talk to, ask to talk to a supervisor. If you can't get anywhere by the third supervisor, you're trapped.
- Negotiate your own reduced Interest rate
- Stretch your repayment schedule
- Pay off the largest interest debts First and add more money
- Write 2 checks: One for the minimum payment and One for any additional money with a note in the memo that states: "Principal Only Payment." This one simple measure can save you tons of money. If you don't mention this, your money is automatically applied to the interest and you'll pay more interest for a longer period. Yeah, that really sucks, definitely not for them. For you.
- Figure out - there are free debt calculators all over the net - what it would take to repay your highest interest cards first. I plugged in my own and got up to the fact that if I add $60 a month to my minimum credit card payment, I can have a $1300 debt paid in 12 months with $66 interest.
- If I continue with the minimum payment, It can take more than 6 years and cost me over $2500. Simply that one action that I took put over $1134 back in my purse - in one year. And I did it personally. Without debt consolidation fees!
I don't recommend any debt consolidation firm. They prey on your despair and the doom and gloom of the length of paying back your credit cards at minimum payments.
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