Debt consolidation is a very important alternative that you should understand fully before moving on to decide you want to file personal bankruptcy. Debt consolidation, sometimes known as debt counseling, is a process by which you sign an agreement with a third party management company that will act as a go-between for your and your creditors. Debt counseling practices are generally non-profit organizations that have a powerful ability to moderate relationships between creditors and consumers. That means that if you are having difficulty keeping up to date in your bill payments, a credit consolidation company can greatly assist you by negotiating lowered interest rates with your creditors. Debt consolidation companies request copies of all your account statements, and then they draft a payment plan based on re-calculated interest rates that are lower than your original rates. There are two major conveniences that you will notice immediately when you sign on to work with a reputable debt counseling service: firstly, you will enjoy a break from collection attempts on most types of bills, and secondly, you will have to make only one single payment once your plan is approved.
If you choose to work with a credit counseling service, you are contractually obligated to make timely payments on a monthly basis in order to continue enjoying the benefits of the service. If you fail to make one or more payments, the service retains the right to end your contract. One major difference between credit counseling and bankruptcy is that you do not have to list every single one of your debts when you enroll in a debt consolidation program. You can choose which bills will be part of your new payment plan. However, if you enter a credit card into these programs, your credit is usually suspended and the account is considered closed. While these points will most likely be visible on your credit report, they are nowhere near as damaging as bankruptcy, and if the credit consolidation program enables you to make six months of straight online payments, you will already have made progress in improving your financial situation.
You should be aware that debt consolidation organizations are a third party that represents you to your creditors, but they are not attorneys and therefore they do not provide you with legal presentation or protection. Some credit counselors charge a modest monthly fee that might sometimes be in addition to a program enrolment fee. Non-profit business in general is exploding in the United States, and there are currently dozens- if not hundreds -of credit counseling firms. If credit consolidation sounds like an attractive solution for you, be sure to compare several different offers and see which one might be best. See what unique benefits each might be able to give you. Some debt consolidation services even provide you with a package of coupons and discount cards that are available exclusively to their enrolled members.
To get a good idea of some of the offers that are available for debt consolidation loans and other debt management opportunities, you may find it helpful to visit any of these websites and compare the services and options they describe: