According to Value Penguin, the average person in America holds 3.1 credit cards and the average person owes $6,354 in credit card debt. Overall, Americans possess 1.5 billion credit cards and own $815 billion on these cards. This shows they find plastic to be very convenient when making purchases, as they buy the item now and pay the bill later. However, quite a few men and women find they overspent on these cards and are now facing overwhelming debt. They need relief from this debt and look to bankruptcy as a solution. Fortunately, other options remain available, and a debtor needs to look into debt consolidation as one solution to their debt issues. What is debt consolidation, and how does one go about choosing a provider to work with for this service?
Why Debt Consolidation?
Many individuals overspend. In fact, research shows a person spends more when paying by credit card than they do when paying with cash. Often, they don’t realize the amount they have accumulated until problems arise, and then it’s too late. Besides the interest they pay each month, many men and women find they accumulate late fees and penalties. Those who make their payments on time discover paying the minimum balance each month means they will pay for years to come on their debt and significantly more for an item than the amount charged when they purchased it. Breaking free of the cycle seems impossible, but it’s not. National Debt Relief can help.
Countless debtors don’t understand debt consolidation or how it works. When a person consolidates or merges their debts, they make one payment each month to clear the debt. This eliminates the risk of missing a payment and accumulating late fees or penalties. Consolidating the debt frequently lowers the interest rate the debtor is paying and the monthly payment drops for most debtors. However, before consolidating debt, the individual must ensure they have the funds to make the payment each month and understand they cannot take on new debt until they pay the debt in full. Debtors who cannot meet these two conditions find they haven’t obtained debt relief. They ended up making their financial situation worse.
Regulating Debt Consolidation Providers
One area of concern involves the lack of regulation for debt consolidation providers, although steps have been taken to increase this regulation. Many providers offer this service, but this doesn’t mean a debtor should work with the first company they contact. Certain providers withhold vital information regarding their services, fees, penalties, and more. The amount going to clear the debt decreases significantly when the fees and penalties are added, which hurts the debtor. While federal and state lawmakers have passed legislation to prevent practices such as these in the industry, debtors find they still occasionally encounter unscrupulous providers. For this reason, the debtor must research several providers to find one that meets their needs, has an excellent reputation, and an outstanding track record. This protects the debtor from paying more than they must to clear their debts.
Choosing a Debt Consolidation Provider
Debtors need to consider several factors when choosing a provider to work with. They must compare these companies with the goal being to improve the borrower’s finances rather than making their financial situation worse. Debt consolidation helps many individuals as it allows them to improve their financial situation while doing less damage to their credit than some debt relief options. However, take care when selecting this provider. Consider the following three things when you choose who to work with.
Read reviews of the various providers to see what clients say about the services, staff, and more. Look at reviews on the provider’s website and reviews found on other websites offering this information. It’s best to gather information from a wide range of sources to get an accurate picture of the company. The Better Business Bureau collects information on companies and can be a great resource. Read the provider’s website carefully and see if it raises any red flags. A person should always trust their instincts when choosing a provider of this type. If something seems off, it probably is. Ask each company to produce the certificates of registration and confirm the authenticity of the documents before signing a contract with any provider.
Read the Fine Print
Before signing any contract, read every word of the document carefully. This document contains the terms and conditions that the debtor must abide by through the contract. Here, the provider shares information about any late fees, penalties, and hidden charges. In addition, the contract explains what steps will be taken if the debtor defaults on the loan. Men and women need to ensure they understand what they are agreeing to and ask questions if there is any confusion. If a provider refuses to answer these questions or cannot answer them satisfactorily, it’s best to continue looking for a company to work with on this task.
Share All Necessary Information
In addition, debtors need to be forthcoming with any company they may use for relief. A provider cannot make recommendations on how to get this relief if they don’t have a clear picture of the debtor’s financial situation. Although it may be embarrassing to share personal information, now is not the time to hold back. The more the provider knows, the easier it becomes to find the right solution for the debtor’s unique situation. Quite a few debtors find they benefit from debt consolidation. Others discover debt settlement better meets their needs, and some individuals find their only option will be bankruptcy. The provider cannot know this until the debtor shares all facts with those they may work with.
Debt consolidation helps countless individuals every year get their finances back on track. When this happens, the debtor gets financial relief and emotional peace. Overwhelming debt weighs heavily on a person’s mind, so the sooner they clear the debt the better. Care must be taken, however, to ensure they select a reputable provider. When they choose the wrong provider, the debtor finds their financial situation actually becomes more precarious. Nobody wants this to happen.