Bill consolidation - How to pay off bills at reduced rates
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.
With proper help you can
- Lower your monthly payments
- Reduce interest rates
- Waive late fees
- Eliminate collection calls
- Avoid bankruptcy
- Have only one monthly payment
- Become debt free
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How to pay off bills - 2 types of bill consolidation
Find out how to pay off bills using any of the 2 types of bill consolidation as given below. Then decide upon what is the best way to consolidate bills.- Bill consolidation program: This is similar to a debt consolidation program wherein you take help from a consolidation company. The company negotiates with your creditors for a reduction in your interest rates so that you can pay down the debt comfortably. In return, the company will charge you a certain amount of fee.
If you have dues on credit cards, medical bills, and student loans, they can be paid off through the consolidation program. Using the program, you can consolidate bills such as utility payments, store cards, personal loans etc. However, secured debts such as mortgage or car loan cannot be included in the program. The bill consolidation program also helps to reduce or eliminate late payment charges through negotiation with creditors.How bill consolidation program works
Take a look at the 5 steps in a consolidation program.
- Debt counseling: The bill consolidation company will assess your financial needs through a free debt counseling session. The debt counselor will ask for details of your outstanding bills and monthly income and help you find out how much you can pay monthly. The counselor will discuss the possible options for bill consolidation and help to choose the one that's best for you.
- Negotiation: The consolidation company will negotiate with your creditors or collection agency (CA) in order to reduce interest rates at which you need to pay off bills. They may ask your creditors/CA to waive off or reduce late fee amount. If you have taken out credit cards, the consolidation company will have all card accounts closed. That is, you cannot use them any more.
- Prepare a budget: The bill consolidation company will assist you in preparing a budget based upon your current financial situation. This will help you figure out how much you can afford to pay each month on your bills.
- Repayment plan: Depending upon how much you can afford, the company will negotiate a repayment plan with the creditors/CAs.
- Monthly payment: Start making monthly payment to the bill consolidation company. The company then distributes the payment among your creditors/CAs.
- Bill consolidation loans: These are personal loans taken out for bill consolidation. Bill consolidation loans are available at a rate usually lower than the average interest rate at which you're supposed to pay off bills. Thus, you can consolidate bills and make payments using a single loan. So, instead of multiple bills, you need to make a single payment each month in order to repay the consolidation loan. However, watch out for the loan costs when you go for it.
How to decide what is the best way to consolidate bills
If you're concerned about "what is the best way to consolidate bills?", 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.
Bill consolidation laws to protect debtors
Bill consolidation laws are enacted in order to protect debtors from being harassed by creditors or collection agencies. These laws govern the practices of creditors and CAs. Most of the provisions of bill consolidation laws are included in the Fair Debt Collection Practices Act (FDCPA).
Bill consolidation laws such as the FDCPA impose limitations on the practices of CAs so that the debtor receives fair treatment and is given a fair opportunity to pay off his debt and improve his financial situation.
How to benefit from bill consolidation
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.
In case you go for bill consolidation loans, you can still 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.
Related Forum Discussions
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#1
09-17-2005, 09:30 PM
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Bill consolidation - How to pay off bills at reduced rates
I was just wondering how it is working out for anyone in a bill consolidation program now.I know the consultation is free,but what is the average cost once you sign the contract?
How much is the small fee that bill consolidation companies charge? What are the average monthly payments including fees? I'm still not sure if I want to go that route yet. My main worry is the time frame that it takes to begin. I have never defaulted on a loan and do not think I can handle the harassing phone calls,but its getting harder and harder to pay these bills. I guess I just feel that I got myself into this mess and now I must get myself out.Its not the payday loan companies that did this to me,I did it to myself. 
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"No amount of time can erase the memory of a good cat, and no amount of masking tape can ever totally remove his fur from your couch." Leo Dworken 
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#2
09-17-2005, 09:33 PM
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Bill consolidation
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.
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#3
09-17-2005, 11:45 PM
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Bill consolidation help
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. __________________
"No amount of time can erase the memory of a good cat, and no amount of masking tape can ever totally remove his fur from your couch." Leo Dworken
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#4
09-18-2005, 08:27 PM
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Bill consolidation
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!
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#5
09-19-2005, 10:18 AM
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Join Date: Jul 2005
Posts: 292
Credits: 6,786
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bill consolidation advice
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.
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#6
09-19-2005, 02:17 PM
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Senior Member
Join Date: Mar 2005
Posts: 4,127
Credits: 51,483
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Bill consolidation laws
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. __________________
Debtconsolidationcare offers free counseling and help, please avail the services before taking any major decisions.
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#7
10-19-2005, 11:35 AM
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Bill consolidation loans
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
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#9
09-06-2008, 05:45 AM
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Bill consolidation laws
can someone add some state specific bill consolidation laws to make this forum thread more informative
- Vikas __________________
1st year law student at John Marshall Law School ============================================ DebtConsolidationCare - Largest Community of people in debt.
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#12
02-09-2009, 08:09 PM
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Another option, work an extra part time job and use that to pay off the balance ASAP. Even though your only making $8.00 per hour. The interest you save in the long run increases this rate 10 fold. In interest savings alone, you could be making $80 per hour.
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#13
10-27-2009, 12:24 PM
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Join Date: Oct 2009
Location: Citrus Heights, CA
Posts: 8
Credits: 298
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Great point about the interest! Do people realize that only a small fraction of their payment is actually going to the balance of the account? Settling or consolidating - get rid of the interest!
Einstein was asked what the most powerful force in the universe is, and he answered, "Compound interest." So, by whatever means you use, get rid of interest payments and get debt free! Then save and have the interest work for you!
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#14
12-29-2009, 06:00 PM
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Join Date: Dec 2009
Posts: 9
Credits: 277
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Bill consolidation programs is to allow individuals and households to gain breathing space with their finances.It is important for the debtor to taking on new debt.With a chapter 13 bankruptcy petition,Failure to make regular payments is may result in the homeowner losing his home,despite filing a bankruptcy petition.
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#15
01-08-2010, 11:48 AM
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#16
01-11-2010, 07:53 PM
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paying off bill while in college
Can you consoildate bills if you are in college and live off student loans and have no other income and have a child? Will they work with taking a payment twice a year instead of monthly? I would like to pay off my debt in the next two years this way but I do not have a monthly income and have a child.
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