Debt consolidation?

Question

Has anyone had any success with those debt consolidations that they advertise on tv? If so which one did you go with? & are there any catches? Thanks so much!

Answer 1

No success with debt consolidation because we didn't change our spending behavior! They usually cost more in fees and do a "service" that you can do yourself.

About debt CONsolidation by Dave Ramsey:
"Myth: Debt consolidation saves interest and you have one smaller payment.
Truth: Debt consolidation is nothing more than a "con" because you think you've done something about the debt problem.

Debt consolidation is dangerous because you treat only the symptom. The debt is still there, as are the habits that caused it. You just moved it! Our counselors will not recommend debt consolidation for a client.

The reason that we do not use debt consolidation to get out of debt is because it doesn't work. You end up paying about the same amount, which doesn't really help you pay your debts off faster. Most people end up taking on more debt after consolidation and several end up in bankruptcy."

What did work for us is reading The Total Money Makeover by Ramsey and following a budget every month.

Answer 2

If you fail to correct the behavior that generated the debt, even if the debts magically disappeared, you would still be getting deeper in debt. If you correct the behavior, you don't NEED the CONsolidation. Yes, I deliberately capitalized CON. Use the difference between what you earn and what you spend, including whatever the CONsolidation company would be charging to pay of the debt.

Dave Ramsey will help with the behavior adjustment.

Forget what it does to your credit history. once you learn to live on less than you make, you don't need credit. If you can't pay cash, you can't afford it.

Answer 3

Here are some things to remember:

1. Using the regular debt consolidation you hear about on TV that say they will "work with your creditors to lower or even eliminate your interest" are not worth the penalty you will pay on your credit history. What they don't tell you on the commercial is that by doing that you will save money but you are essentially paying the creditors back LESS than you agreed to pay by using your credit card. The creditor doesn't much care about it since they are at least getting most of the money back a lot faster than they would if they waited for you to pay it back on your own. But it will show up negatively on your credit report.

2. The best option is to apply for a personal loan from a bank if you shop around you can find one with a lower interest rate than you are currently paying on your outstanding debt... and you have to consider that if you have more than one credit card with a balance you are not just paying interest to one creditor you're paying it to ALL of them. By using the personal loan to pay off those debts you are in essence "consolidating" them since now you only own money to one creditor (the bank) and you're paying less in interest (read: smaller payments). I would look into well established (larger) banks... not necessarily the bank you have your money currently in.. unless they can give you a competitive interest rate. I would suggest Bank of America or another similar bank.

Good luck!

Answer 4

they don't work, most if not all are scams. they take your money and pay little if anything towards the debt.

consolidation don't work anyway.... moving the debt around won't help, you need to pay it off, get it out of your life... that is the solution.

you can do that yourself... if you are willing to learn.

Answer 5

Even though bankruptcy is always a personal choice, do not file without checking out all other options. Also keep in mind many debt counselling companies are scams that can get you further into debt.