Debt Consolidator

If you're one of those individuals that have unpaid bills reaching a point where they are becoming overwhelming then you might also be thinking about contacting a debt consolidator. Basically, a debt consolidator is a company or service that helps you to reduce your existing monthly payments by consolidating them into a more manageable form.

Finding a Good Debt Consolidator

Using a debt consolidator can certainly help some people get out of debt. But you should be aware that not all debt consolidators are alike. For example, a good consolidation company will help you negotiate payment plans with creditors and advise you on how to manage your budget so you don't wind up back in the same situation after taking out a consolidation loan.

The Debt Consolidation Business

Additional Resources

The way debt consolidators make money is by building in a fee that will be part of the monthly payments you make to them. They take your payments and pass them along to your creditors, while the creditors are likely to turn around and pay a rebate to the consolidator or a fee. This is acceptable since the debt consolidator is helping the creditor get paid. From a creditor's point of view, a reduced payment is better than none.

Debt and Bankruptcies

Of course you can always go the bankruptcy route instead of trying to pay off your creditors. For most individuals, bankruptcy means either Chapter 7 or Chapter 13. Bankruptcy under Chapter 7 means that some of your personal property can be sold off to pay down some of your debt, with the remaining debt likely to be forgiven. Bankruptcy under Chapter 13 allows you to work out a payment plan that has a term of around three to five years.

But bankruptcy should never be considered an easy way out of debt. In fact, some debts might not be forgiven under a personal bankruptcy. You will likely still be responsible for child support, income taxes and most of your student loans. Plus filing for bankruptcy will make getting credit if the future very difficult and you will likely have to pay attorney fees to go through the legal process.

Debt Consolidation Options

So what exactly then are your debt consolidation options beyond the help of a debt consolidator?

Home Equity Loans - A home equity loan will usually carry a low interest rate and the interest you pay will be tax deductible.
Personal Loans - If you are looking at a credit card company charging you a 20% annual percentage rate on your outstanding credit card balance, a personal loan will offer you better monthly payment terms.
Debt Counselors - Many debt counselors work for not-for-profit organizations and are willing to help you find a way out. The nice thing about debt counselors is that they will help you to stay out of debt by creating a realistic household budget for you.

There is little doubt that a debt consolidator can help you - if you find a good one. But you need to be careful. If you are desperate to find a solution to your debt woes, just be aware that there are many people out there ready to take advantage of your situation. And those types of services will only help to drive you further into debt.

Debt Consolidation Help

We've mentioned some of the good and the bad in earlier articles. You might want to take a close look at our Christian Debt Consolidation article to see what those services are all about. You might also want to check out our article on Debt Elimination for some other ideas on how to reduce your debt. Finally, if you looking for a debt consolidator because of problems with credit cards, check out our article - Credit Card Debt Consolidation - for some specific help with that problem.

Debt and Loan Calculators

We also have a wide array of debt and personal loan calculators. You'll find all of these useful tools in our calculator section. In particular, you might want to look at our calculators dealing with debt consolidation, mortgage refinancing and paying off loans.

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