Smack Debt Consolidation Services

Debt consolidation and debt settlement companies are not the same. There is a huge difference between them.

Debt consolidation is the process of seeking a home equity loan to pay off your current loans. In short, you are reducing your interest rate by consolidation your debts into a single debt. Since your interest rate is reduced, you monthly payments get lowered as well. You can get a debt consolidation loan from your bank, lender or credit union. You can also choose to get a first mortgage or a HELOC debt consolidation loan and the loan officer will advise you on what is the best one for your situation. Besides you don't have to pay the loan officer. It is a service provided by your bank.

You can also get a debt consolidation loan from a debt company and here is where it starts to get ugly. Some debt settlement companies disguise themselves as debt consolidation companies. They will advise you to make one lump-sum payment to them and they will take care of your accounts. Many of these debt settlement companies will pocket the first month payment as fees. They will also advise you to stop making any credit card and loan payments to the credit card companies. If the debt settlement company is reckless and is not taking good care of your accounts, your credit card companies will report your non-payments to the credit bureau which in turn affects your credit score.

The least expensive way to settle your debts is to pick up the phone and call your creditors. Many have hardship programs and will be willing to help you out. By not speaking to them in time, you will worsen your debt problem. You can also talk to your bank or financial institution about debt consolidation loan and work your way out of debt. Clearly, this is no brain surgery. All it needs is a little assiduous effort on your part and your debts will be paid off without impacting your credit scores.

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