Point One: 25% Debt ReductionYou did not get a top notch deal unless the payment plan that you are presented ends up in a reduction in payment of 25% off the sum total of your debt payments before consolidation.
Hypothetical situation: Take a 5-year loan of $100,000 at 8% interest. Take another loan of $100,000 at 15% interest, also for 5 years. Paying each of these loans individually, the total payments over the period of the first loan will be $121,658. For the second loan payments will total $196,601. Thus, the total of both loans through their maturity will be $315,259. If that total is not reduced to approximately $237,000, you failed to obtain a good debt consolidation loan.
Warnings: Various debt consolidation organizations utilize some methods that may fool you. They may possibly stretch out the repayment period so it seems that that you are paying 25% off. They may possibly also shove future interest payments into the principle which means you do not notice it right away. There is certainly alternative ways to technically be doing right but obfuscating what is invariably going to transpire.
Point Two: Spending Habits to Avoid Debt ProblemsIf you have accumulated debt due to unnecessary spending you need to transform your lifestyle. People frequently think of a credit card as a source of income. Treated this way, a credit card becomes like an employer whom you pay to let you be employed by him. To safeguard yourself sometimes you need to chop up your cards, and maybe giving one to some trusted relative or close friend for emergency purposes.
Point Three: No Legal ProceedingsOne of the most essential points to a client of debt consolidation is an immediate and rapid end to any legal action: Collections. Lawsuits. Garnishment. This is number one because these actions are the major cause of the anxiety of the client. Having collectors call you at work and home, calling your superior, etc. is one of the main reasons you are seeking debt relief.
Point Four: No Fees for Debt ConsolidationNo one who works for you in a debt consolidation deal should demand any fees in anyway. Nominal expenses to cover recording or duplications are acceptable. Lawyer or documentation fees should not be your problem. All fees must be waived or paid by the creditors.
Point Five: No BankruptcyNo one should insist or ask that you file for bankruptcy, or even consent to file. Personal bankruptcy ruins your financial life in a most unbelievable way for up to ten years. Indeed, personal bankruptcy can also be a last resort, however consider alternatives heavily before taking such a drastic step.
Debt Consolidation Last WordsExpert debt consolidation advisers advise those in the market for such a service to stay away from debt consolidation organizations that make money off their customers. Their interests are focused on their bottom line, not yours. You need to choose the National Foundation of Credit Counselors or similar not-for-profit agency.
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