Our Blog


What You Need To Know About Debt Consolidation Agencies

If you are looking for a way to deal with your overwhelming debt, there are several options available. A good debt consolidation program can help you to get back on the right financial track. It is, however, important to remember that debt consolidation can be detrimental when done for the wrong reasons or through the wrong source. Before you decide to consolidate your debt, you should find out everything that you could about the process.

1.    The debt management plan

Debt consolidation is a third-party payment scheme where you can avoid juggling different accounts by making one payment. The credit agency distributes the money that you pay to your creditors until the amount is paid in full. The agencies do not give loans or settle debts but they have arrangements with lenders and they can get lower fees and interest rates to make sure that most of the payment money goes into paying the balance instead of the other charges.

2.    Choosing the right agency

It is important to note that agencies range in the quality of their services. When dealing with your finances, you need to be very careful about the choices that you make. Make sure that you work with the right company or agency so that you can get the best service. A good agency will ensure that your payments are sent on time and you can benefit from the best support. All plans have the same basic structures but the agent helps to determine the amount required to pay the debt in three to five years. You can pay more if you want to get out of debt faster and you can also choose to stop the plan.

3.    Get some financial counselling

Before you decide to get debt consolidation, you should consider getting some form of counselling. The fact is that there are reasons why people get into debt and in many cases; this is something that needs to be dealt with before starting the process. You need to determine how you will pay your basic expenses and determine if there are better options. Getting an assessment of your entire financial situation will help to ensure that you avoid getting into debt all over again.

4.    Consolidation is not for everyone

It is important to realize that consolidation is not the best option for everyone. You need to know if it is right for you and if it is to your advantage to get debt consolidation. For this to work for you, most of your balances will need to be in form of unsecured debts, such as personal loans, credit and charge cards and some collection accounts. If, on the other hand, your debts are in form of child support, taxes and parking tickets, the consolidation plans will not help you. You also need to be confident that you are able to make payments for years, while ensuring you have money left over for your essential expenses.

5.    The payment will remain constant

The consolidation plan is simple, efficient and constant. While you remain on the plan, the payment will remain constant and you will not have to worry about paying more at the end of each month. The payment remains the same until all your creditors have been paid in full. The moment one creditor receives full payment, the other creditors start receiving more and this helps to speed up the process. You will not have to worry about getting persistent calls from your creditors when on this plan.

One of the best things about consolidating your debts is that you do not have to worry about additional charging until the payment is complete. Your accounts are closed and you cannot get new ones until all the debt is paid. This can be difficult for people who are used to credit cards but it is worth it in the end.