8 Benefits of debt consolidation - Why you should consider it



Are you looking to reduce your debt payment and save in interest costs? Debt consolidation program can help you benefit from lower rates of interest and cut down your monthly payment on bills and debts. This article helps you to explore the 8 debt consolidation benefits as given below.


  1. Rate reduction: You can reduce the interest rate on your bills and debts through negotiation with creditors. If you approach a debt consolidation company, they'll negotiate on your behalf. Your creditors (or collection agency, if the debt is sold off) will restructure payments so that you can manage your debts better.

    For example, if you have three credit cards at interest rates of 18%, 12% and 9%, then the average rate of interest at which you've paying them is:

    (18% + 12% + 9%)/3 = 13%

    Say, after consolidation, the interest rates become 13%, 10% and 7% respectively. Now the average rate of interest becomes:

    (13% + 10% + 7%)/3 = 10%

    Now if you owe $5000 on your credit cards, then the reduced rate of interest would save you $150 per month.

  2. Debt repayment plan: You'll get a debt repayment plan from your creditors or collection agencies. The new plan with reduced interest rates will help reduce your bill payments so that you can afford to pay off at least the principal balance in full along with some amount of interest.

    The plan is developed such that you don't default while on a debt consolidation or bill consolidation program. You'll be able to save dollars and organize your finances better.

  3. Single monthly payment: Consolidation program requires you to make a single monthly payment towards your bills and debts. That is, you make one payment to the consolidation company every month. The company will divide and disburse the funds to all your creditors. So, you don't need to make multiple payments to individual creditors at different rates of interest.

  4. Reduction/elimination of late fees: When you default on a debt account, late charges/penalty fees and accrued interest get piled up with time. Such costs can be reduced or even eliminated by negotiation in a debt consolidation program.

  5. Get debt free faster: If you pay a little more than the minimum on your credit cards, you'll take comparatively less time to pay off the debt. A consolidation program helps you to make payments such that you don't have to carry on with an account too long. Thus, it accelerates the time period you need to get debt free. With this program, you can eliminate debt in just 4-6 years compared to an average time period of 20 years or more.

  6. Get rid of collection calls: The consolidation company negotiates with the creditors and collection agencies on your behalf. This helps you to avoid getting harassing calls from your creditors or collection agencies.

  7. Improve your credit: Late payments, defaults and charged-off accounts have a negative impact on your credit score. Once you are enrolled in a debt consolidation program, your accounts start getting paid off. This appears on your credit report and helps in raising your score in near future.

    When all the accounts are paid in full, the consolidation company negotiates with your creditors and tries to get your accounts reported in your favor.

  8. Free debt counseling: Most debt consolidation companies offer free debt counseling service to debtors willing to consolidate their bills and debts. The counseling session allows you to analyze your situation and discuss your debt relief options with a debt consultant. This is to make sure that you know what's best for you.

How the Community helps you

Debt Consolidation Care community ensures that you get in touch with a reliable company to help you get out of debt. Moreover, the community provides a platform - the Debt Forum for you to seek advice from members/experts and resolve your debt problems.


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12-31-2006, 06:24 PM
cat168 cat168 is offline
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Sub: 8 Benefits of debt consolidation - Why you should consider it

What are debt consolidation benefits?
Does it affect my point on the credit report ?
Can I still use the credit card if I 'm in the debt
consolidation program ?
Also, can I pay more than the min. payment ?

Thank you very much
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12-31-2006, 06:27 PM
Lorri Lorri is offline

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Welcome to the forums! This is a community message board forum and by registering (which you did) you will get a phone call (free) from a debt counselor. You can discuss your financial situation at that time.

The members posting on here can help you until then by answering any questions you may have. Would you care to tell us a little bit about your situation or ask us any questions?
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12-31-2006, 10:34 PM
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DebtFairy DebtFairy is offline
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I haven't received me call yet but I'm sure it because of the holidays. I'm looking forward to the call.
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01-01-2007, 02:35 AM
Anonymous
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Thanks for not answering the question Lorri, and instead, posting the same generic script everyone else always does when there is a new member.

What more information is needed from her to answer the questions she asked?
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01-01-2007, 05:20 AM
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SUEBEEHONEY70 SUEBEEHONEY70 is offline

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Hi cat -

Welcome to the site!

I'm sure you are referring to the debt consolidation program, right? And how it affect your credit, etc.?

Once you enroll and your creditors start receiving your payments on a timely basis, your credit report should start reflecting "paid on time" on those accounts.

Your credit card account may either be frozen, or you may be asked to give it up altogether. If you feel you need a card for emergencies, I might recommend obtaining a pre-paid mastercard (available at many stores) and loading it with a little money each payday. Most credit counseling agencies will look on continuing to use the same credit card you are trying to pay off in their program as counterproductive to your goal of being debt free.

I'm sure you can pay more than the minimum payment on the program - just discuss it with your debt counselor when they call!

I hope that answers your questions - if you have more, or you're unclear on something, please let us know. We're here to help!
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01-01-2007, 05:23 AM
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SUEBEEHONEY70 SUEBEEHONEY70 is offline

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Hi Debt Fairy -

I'm sure your call has been delayed by the holidays. If you are anxious to get started, why not check out the ranking chart and find an agency in your area to work with?

http://www.debtconsolidationcare.com/ranking-chart/

I hope that helps - Happy New Year!
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01-01-2007, 11:24 AM
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DebtFairy DebtFairy is offline
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Thanks Sue. I figured it was the holidays. This will help. I'm anxious to get started and take advantage of the debt consolidation benefits. Happy New Year to you too!
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01-01-2007, 11:25 AM
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DebtFairy DebtFairy is offline
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Sorry, didn't mean to post twice. My mouse is click-happy today.
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01-01-2007, 11:28 AM
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finsfan13 finsfan13 is offline

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Hey Doug...

How is she supposed to answer the question when no one has any idea yet what the question actually is??

When a statement is vague we use the "generic response" to draw the poster out and explain their situation..Then we can be personal with them.
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01-01-2007, 01:48 PM
Anonymous
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Finny,

I'd love to here you elaborate as to what further information is needed to answer these questions:

Debt Consolidation:

1)does it affects my point on the credit report ?
2)can I still use the credit card if I 'm in the debt
consolidation program ?
3)also, can I pay more than the min. payment ?

The most effectiv way for Lorri -- the Debt Samaritan -- to reply would have been to answer those questions to the best of her ability, and ask for more information as applicable. She could have made specific requests for information as needed in the responses, and finished with a general statement like, "Additionally, would you care to tell us a little bit about your situation or ask us any questions??
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01-01-2007, 01:51 PM
Anonymous
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I'm sure Lorri has provided valuable assistance to members and guests on numerous occasions. But this was not one of her better efforts.

It strikes me as just gratuitous posting -- simply running up her post count in attempt to bolster her eventual campaign for Hall of Fame status.
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01-01-2007, 01:56 PM
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natdust20 natdust20 is offline
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I don't think that is why she was posting that. Whenever a new member comes along, everyone on here tries to get a chance to welcome them. I found that comment very offensive as all of the info that Lorri gives is great. She and the others on here have helped me out alot and have made me learn to help out others also. Anyway, once cat168 logs back on, he/she will be able to post more questions and get the comments from everyone..
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01-01-2007, 01:58 PM
Anonymous
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Grow some cahonies natdust
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01-01-2007, 01:59 PM
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natdust20 natdust20 is offline
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I don't see why ppl even come on here if they are going to try and make others feel bad about their info..
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01-01-2007, 02:00 PM
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SUEBEEHONEY70 SUEBEEHONEY70 is offline

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Ok, let's get back to work on solving debt issues. This could turn into a name calling contest very quickly.
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A journey of a thousand miles begins with a single step...and becoming debt free is a journey!
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01-01-2007, 02:01 PM
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finsfan13 finsfan13 is offline

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Hey Doug...

I have been here a long time, and only one other person has ever called me Finny..I find this very interesting, do YOU already know ME?

Why don't you register?
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