Their behavior hasn’t changed, so it’s extremely likely they will go right back into debt. The debt includes a two-year loan for $10,000 at 12%, and a four-year loan for $20,000 at 10%.Your monthly payment on the first loan is $517, and the payment on the second is $583. You consult a company that promises to lower your payment to $640 per month and your interest rate to 9% by negotiating with your creditors and rolling the two loans together into one. Who wouldn’t want to pay $460 less per month in payments?You are only restructuring your debt, not eliminating it.You don’t need debt rearrangement, you need debt reformation.Once their fee is accounted for, they promise to negotiate with your creditors and settle your debts. Well, the debt settlement companies usually don’t deliver on helping you with your debt after they take your money.They’ll leave you on the hook for late fees and additional interest payments on debt they promised to help you pay! And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward –- and free. " Debt consolidation is a strategy to roll multiple old debts into a single new one.
This means your "lower payment" has cost $5,688 more.Most of the time, after someone consolidates their debt, the debt grows back. They don’t have a game plan to pay cash and spend less.In other words, they haven’t established good money habits for staying out of debt and building wealth.In fact, you end up paying more and staying in debt longer because of so-called consolidation.
Get the facts before you consolidate or work with a settlement company.
You don’t need to consolidate your bills—you need to delete them.