If you've fallen behind on your bills and cannot manage them properly, bill consolidation may be your right choice. Bill consolidation is a way through which you can pay off bills by taking advantage of reduced interest rates and fewer monthly payments. Attending a no-obligation free counseling session with a debt relief company will enable you to understand whether you should consolidate bills or look for some other options. Take a look at the topics given below to know what bill consolidation is all about.
For example: You have taken out 3 credit cards from a company at the interest rates 15%, 20%, and 25%. The total outstanding balance is = $35000.
This means the average interest rate is (15%+20%+25%)/3 = 20
After enrolling into a credit card bill consolidation program, the counselor will negotiate with your creditors and cut back the interest rates on each credit card.
So, if the interest rates on the 3 credit cards are reduced to 10%,15%, 20% respectively, then the average rate will be - (10%+15%+20%)/3 = 15%
The total amount of money you can save through credit card bill consolidation program = (20% - 15%) * 35000 = $1750 per month.
However, after enrolling into a credit card bill consolidation program, you have to make the payments on time, or the interest rates may increase again.
If you're concerned about the best way to consolidate bills, then you need to compare the types of bill consolidation. The consolidation program will no doubt take less time to get you out of debt, as compared to a bill consolidation loan, which is usually available for a long term.
If you're not comfortable taking out a long term loan, then going for the bill consolidation program would be a better option. But if you think managing a long term loan isn't a problem for you, then you may choose the bill consolidation loan. While you compare the 2 options to find out what is the best way to consolidate bills, watch out for the monthly payment and fees required in each case. This will help you to decide whether a bill consolidation program or loan is the best option for you.
Most of the laws that regulate bill consolidation loans focus on regulating the financial institutions that provide the consolidation loan.
All nationally chartered banks, and a few state chartered banks, are required to be insured by the Federal Deposit Insurance Corporation. The FDIC is a US government corporation created in 1933, in order to protect consumers from the problems created by the bank failures in 1929. The FDIC protects consumer deposits, examines financial institutions for safety and financial health, and performs certain functions to protect consumers.
Other than the protections provided by the FDIC, the Fair Lending Act and the Truth in Lending Act protect consumers by ensuring that all the terms of the loan are provided to the consumer when they take out the loan.
The amount of interest a lending institution can charge their customers and other terms of the loan are governed by the law of the state where the customer lives.
Therefore, it is important that when you are contemplating taking out a consolidation loan, you make sure that the institution you are borrowing from is insured and follows the applicable state and federal law. The best way to find a loan that you can afford and can be sure of is to talk to the lender in person.
Bill consolidation or debt consolidation program helps you to consolidate bills and make lower monthly payments (due to reduced rate of interest) thereby reducing stress. You get a restructured payment plan as per your affordability. The best thing is that you need to make only one payment each month. Thus, you can avoid dealing with several creditors at a time. For further details, look through the 8 benefits of debt consolidation.
If you go for bill consolidation loans, you get the benefit of a lower rate and monthly payment. Bill consolidation loans have a long repayment period (or loan term). When there's an extended loan term, it does help in reducing monthly payments. But the debtor ends up paying more in interest for the entire loan term. So, bill consolidation loans may give you instant relief from multiple bills but the total interest paid over the repayment period can offset any short term savings.
The purpose of bill consolidation is to help you pay off debts through lower interest costs and improve your credit score. However, if you'd like to reduce your debt amount and not the interest costs, you may try out debt settlement. Whichever option you choose, make sure you don't take out new credit/loans as any additional debt can affect your payment in bill consolidation or settlement.
Debt Samaritan
Posts: 404
Credits: 24791.2 Send message to Rhonda28
Are you looking to consolidate payday loans? I know a few people mentioned a bill consolidation company by the name of BHR &Associates. I personally have not tried them. I have tried working with the individual companies after I defaulted.
Posts: 546
Credits: 48417.4 Send message to twokidtwocat
Yes the payday loans are my main problem,I have a few credit cards,but if I didnt have the payday loans,I would not be behind on them.I was just wondering how much the monthly payments were on average.Which payday loan companies are willing to work with you and which ones arent?
Thanks for your reply.
Debt Samaritan
Posts: 322
Credits: 21104.35 Send message to chmartinbaby06
I haven't tried BHR & Associates but from what I here on the forums they are a good company to work with.And most of the payday loans if you explain your situation to them they will most of the time try to set up arrangements were they can work with you!
Posts: 283
Credits: 6925.45 Send message to Taquita
I am in a bill consolidation program. All of my debt is credit cards and medical bills. Thankfully, I don't have any payday loans.
The interim process was very tough for me. We were having difficulty paying the bills, so we certainly couldn't pay the bills and the consolidation program. :( We got alot of calls, so for the most part, I left the computer on the internet and anyone who needed to get ahold of me could call my cell.
It was very difficult for us to not pay our bills for the month, but we had to focus on the big picture. We had 15K of debt and in less than three years we will be debt free! And our creditors are still getting paid what we owe, but the interest rates, late fees and over-the-limit fees are gone, so we can make real progress on our debt - as Martha Stewart says - It's a good thing! For every one involved - us and our creditors!
Oh, and our payments for 15K of debt for three years is between $450 and $500, including the fees.
It's more like a jar of jalapenos.
What you do today,
may burn your butt tomorrow!
Posts: 3957
Credits: 55973.9 Send message to roxette
twokidtwocat, I have realized that most of the companies are not willing to work with payday loan companies because of the higher risks involved in it.
Taking payday loans are also not a good decision made at the first choice so we really need to work on our own so that we can recover from this situation.
I hope we will be able to do that only if we follow a restricted budget. A proper planning and management will be helpful to overcome this problem.
We should try to raise our income in as many ways as possible. Reduce the overall expenditure and contribute the money saved towards the debt account. This is the first thing that will be told to do by the professionals also. We ourself have to give a try first. The creditors will be willing to work with us if they realize that we are more than willing to clear the debt. If they get this impression, they will wipe off most of the financial charges and the late fees.
We need to give a try before it keeps on adding with financial charges and becomes an unbearable pain.
Posts: 270
Credits: 6081.25 Send message to shopaholic5
yeah, I don't have a home phone number so none of my creditors could get a hold of me the month I started my consolidation program, but they found my mom's number and she was getting calls which started to become a bit harrassing. My mom told them off and they stopped calling her. I felt really pathetic when that happened and I explained to my mom what was going on. But once that first month passes then everything just feels better...less stress. Even though you are still paying a lot of money every month, it is very controlled and you don't have to worry about every single bill because it is all in one.
I pay 520 a month (just for the first 6 months and then it is lowered). But I have the option of paying monthly, bi weekly, or weekly. I have them take money every friday so it isn't a HUGE bill all at once. And a lot of people say "you could just do this on your own, you don't need a consolidation company". And well I have learned that credit card companies are more apt to listen to a consolidator and also if you aren't good at managing money to begin with...how are you going to manage doing all of it yourself. So I don't mind paying a fee for a professional to help. You feel like you are being taken care of rather than stressed out because you can't organize all your bills and pay them on time.
-Sarah
need to know how i can get help on my late truck payment to keep from repocession got laid off and im gettin back on my feet and i need help to keep my truck from bein repo
Posts: 1293
Credits: 151306.25 Send message to Vikas
can someone add some state specific bill consolidation laws to make this forum thread more informative
- Vikas
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I OWE MY MOTHER ALOT OF MONEY ALSO FROM USING HER CREDIT CARDS AFTER I HAD MAXED MINES OUT, NOW I'M PAYING HER BACK BUT CAN I PUT THAT IN THE DEBT CONSOLIDATION ALSO?
what if we dont have credit card bills that are keeping us from paying our bills on time? we are pass due and cant seem to catch up.
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