Tuesday, October 30, 2007

Pros and Cons Of Debt Consolidation

Are you familiar with a new ways of getting help with debt called debt negotiation company? It involves negotiating with creditors to lower the amount you owe, not just your interest rates as with Consumer Credit Counseling Services (CCCs). Although this type of credit debt consolidation has a number of potential benefits, it is typically only an appropriate debt solution for consumers who are seriously overextended and considering bankruptcy.

Some of the benefits:

1) you can dramatically lower both your debt and payments, saving you thousands;

2) for consumers with accounts in collections, calls can be minimized and routed to the debt negotiation company.

Some of the downsides:

1) your credit will most likely be impacted negatively;

2) creditors can refuse negotiations, leaving a consumer with no options except bankruptcy.

Any reputable service will help you discern whether or not these downsides are a worthy compromise in light of the potential benefits. Generally a good rule of thumb to keep in mind is that if you are able to pay off your debt by making more than the minimum payments, continue on that path. If you have limited income or have experienced a financial hardship which makes getting out of debt any time soon unlikely, debt settlement is a probably a good option.

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