You've probably seen the ads for bad credit debt consolidation. These companies claim they can help you consolidate and eliminate your debt, even if you are overwhelmed by bad credit and haven't made payments recently.After they have worked theirr magic, you'll be left with, "only one uncomplicated monthly payment!"
There are some honest companies who really want to help people who have bad credit. They usually charge reasonable upfront fees, avoid making extravagant claims, and offer professional references on request. Then there is another type of debt consolidation company. This type of company makes you think an easy solution exists, but in reality, they are simply preying on your fears. However, the last kind of business is the norm.
So what is it that dept consolidation companies do for you?
Bad credit debt consolidation companies talk to your creditors and try to lower your interest rates and monthly payments. The total amount that you owe for the month will be known to you, after they have reached an agreement with your creditors. The debt consolidation company will make payments to your creditors after you've sent them this money.
Do legitimate debt consolidation/bad credit companies really exist?
Yes, but usually not through companies that send you emails or advertise on late night television. To qualify for an unsecured loan, your credit score should be high. You may, however, be able to refinance your house or your car to pay off unsecured debt. Your bank or mortgage broker can help you. Reviewing your budget with a recognized financial planner and determining how you can avoid debt in the future might be a good idea.
Bad credit debt consolidation can be achieved by rolling these debts into one, low interest, credit card. There are some disadvantages to this approach. If your credit is truly in the toilet, the credit card company might hike up your interest rate without warning. Also, you need to do something with the rest of your credit cards (e.g., cut them up or burn them) starting new balances on them should be avoided. The final requirement would be to make at least the minimum payment to the card company which holds the balance of your debts.
Seeing as bad credit debt consolidation is a frightening possibility, it is all the more important to find a legitimate company capable of and desiring to relieve your debt woes.
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