Debt Consolidation - Don't Hire an Agency; Do It Yourself
The average American household now has more than $9000 in credit
card debt and the savings rate in this country is lower than at
any time during the Great Depression. And a quick glance at all
of the debt consolidation commercials on late night television
will tell you the obvious - debt is a tremendous problem in our
country today.
Listening to these ads makes it seem as
though only the advertisers can help you get out of debt, as
though they have some financial secrets that will allow your
debts to magically disappear. Is that true? If you have a debt
problem, do you need to hire one of these debt consolidation
services? Is there another solution?
The short answer is
"no." You do not have to hire a company to get you out of debt.
In all likelihood, the company you would hire cannot do anything
that you cannot do yourself. No one can make your debts
disappear; the only way to make them go away is to either pay
them off or file for bankruptcy.
So what do you do? For
starters, pick up the phone and call your creditors. Explain
your situation and tell them that you simply cannot make ends
meet. You would be surprised at how often creditors are willing
to work out some sort of payment plan with their debtors,
especially if the debtor is behind on his or her payments. Their
motivation Is simple - it is much easier to get some of their
money back, under different terms, from a willing customer than
it is to try to get payment by turning the debt over to a
collection agency. It is also better than writing off the debt
as a loss.
By working out an agreement with your
creditors you can also avoid having some nasty notes put in your
credit report. If you can fulfill your obligations, you can have
your debt marked "paid as agreed", which is much better than
having it shown as delinquent.
Of course, you can always
hire a debt consolidation company to do the above for you. They
can call the creditor in order to work out a repayment play for
you. The only difference is that you will not only have to pay
your creditor but you will also have to pay the debt
consolidation company. Just remember that when those debt
consolidation firms run ads on television, they are hoping to
make money from you. If you have a debt problem, you would be
much better off using that money to pay down your debt.