Be wary of offers to reduce your debt via debt consolidation.
A credit counseling agency may recommend that you enroll in a debt management plan that includes consolidation. You deposit money each month with the credit counseling organization, which uses your deposits to pay your unsecured debts, like your credit card bills, student loans, and medical bills, according to a payment schedule the counselor develops with you and your creditors. Your creditors may agree to lower your interest rates or waive certain fees if you’re working with a reputable program, but it can still take several years to complete the program. Be aware that just because an organization says it is “nonprofit” doesn’t guarantee that its services are free or affordable.
Debt negotiation programs claim they can work out a deal with your creditors to lower the amount you owe for an upfront fee. These programs can be risky and may have a negative impact on your credit report and, in turn, your ability to be approved for new credit. You should be skeptical of any business that asks for cash up front.
Credit Repair Documents/Documentation For Consolidation
One hidden factor that these companies fail to mention is that your credit will still be in the dumps for the duration that you’re in the program. Why? Because it can take 2-3 months before the debt companies begin distributing funds to the creditors and the payments may be less than what your normal payment would ordinarily be. Unless a creditor specifically states that they won’t report your payments as late..guess what? Your payments are indeed late and less than normal payments.