Debt consolidation program - Reduce rates and consolidate payments
If you're finding it hard to manage your bills, a debt consolidation program (or bill consolidation) can work in your favor. The purpose of this program is to help you meet your monthly payments and get you out of debt.
How do debt consolidation programs work?
Consolidation programs work in a way such that you can reduce your monthly payments and have any late fees/extra charges waived off or eliminated. Given below are the 6 steps in a consolidation program.
Step 1: Go for no-obligation free debt counseling
Contact a debt relief company and attend a free counseling session with their consultant. The consultant analyzes your financial situation and completes an income and expenditure review in order to find out how much you can pay towards your monthly bills.
- Lower your monthly payments
- Reduce interest rates
- Waive late fees
- Eliminate collection calls
- Avoid bankruptcy
- Have only one monthly payment
- Become debt free
800-DEBT-913
Step 2: Enroll yourself in a debt consolidation program
If the consultant finds that a consolidation program is the most appropriate solution for you, he will send in the required documents for you to sign. The consultant will also provide you with details on the fees required and an authority form which will allow him to talk to your creditors on your behalf.
Step 3: Consultant starts handling creditor calls
When you receive documents, the consultant contacts you in order to resolve your queries before you sign the docs. This is when you can start referring creditor calls to the consultant who speaks on your behalf.
Step 4: Consultant negotiates on your behalf
The consultant gets the details of outstanding balances on each debt account you have. This helps him to do a complete Income and Expenditure analysis. This is then sent to your creditors with the proposal for a payment plan you can afford.
The debt consultant then works with your creditors/collection agency in order to reduce your interest rates and hence monthly payments. He'll also request creditors to freeze or reduce extra charges and late fees on your accounts so that you don't have to pay more.
Step 5: You send in monthly payment to the company
Your monthly payment should be sent to the consolidation company which then distributes it amongst your creditors/collection agency. So, multiple bills are actually consolidated into a single monthly payment. Thus, you don't have to worry about handling several creditors at a time.
Step 6: Your creditors receive the payment
Within a few days of receiving your payment, the company forwards it to your creditors. You are likely to receive creditor statements as a confirmation of receipt of your payment.
Generally, the consultant takes an update of your financial situation after every 6 months or so. If in case your situation changes, you should inform the consultant about it. The consultant will review your situation and then request your creditors for a different payment plan if required. He will also help you with budgeting and money management tips so that you can organize your finances effectively.
For further information on "how do debt consolidation programs work", browse through the "Debt Consolidation" section in debt management faq page.
How does debt consolidation program help you?
The program offers the following benefits:- Low monthly payment due to reduction in rates.
- You may not have to pay late fees/extra charges.
- You can avoid harassing collection calls.
- Different bills are consolidated into one easy payment.
- Get rid of dues in 4-6 years as compared to an average of 20-40 years.
- Positive impact on your credit.
What fees do you need to pay?
There are 2 types of fees involved in debt consolidation programs.- One time representation fee: The consolidation company charges this fee for communicating verbally and in writing with the creditors/collection agencies.
- Monthly representation fee: This is required on a monthly basis for the services offered in handling your monthly payments and distributing them to your creditors
How do you choose the best debt consolidation program?
In order to choose the best debt consolidation program, you need to prepare a list of consolidation companies in your area. Then collect the following information about them:
- How long has the company been in business?
- Does the company have good reputation?
- Is it listed with the BBB?
- What are its accreditations?
After you've gathered the details, follow the steps given below:
- Research online and read reviews about the companies.
- Ask for client testimonials when you approach them.
- Check the company records available on the BBB website.
- Ask for referrals from your friends and relatives.
- Go for a free consultation and take the details about their programs, fees etc.
- See if they are interested to work with you on their fees and payment schedules.
Compare the companies and programs on the basis of the details you've collected. Only then it is possible to find out a reliable company which can offer instant debt consolidation or quick debt consolidation help to repay your bills.
What are the don'ts in a consolidation program?
Check out the don'ts and avoid them when you're working with a company which provides you with fast debt consolidation help.- Don't miss a payment or make a late payment.
- Avoid making major purchases while you're in the program.
- Don't take out any more credit while you're in a bill consolidation program.
- Avoid charging up credit cards close to or above the credit limit.
- Don't make any balance transfer while you're on the program.
It gets easier to pay if you consolidate multiple bills into a single payment. This is what a safe debt consolidation program does for you. So, if you're looking to reduce your monthly bills and combine them into one easy payment, enroll yourself in a consolidation program and get out of debt in a comparatively short time frame.
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12-21-2009, 04:44 PM
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Join Date: Dec 2009
Posts: 1
Credits: 145
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Sub:
Debt consolidation program - Reduce rates and consolidate payments
I currently have about $14,000 in debt on two different credit cards (both with a 12.5% APR from Citibank.)
I have paid off a decent amount of debt (about 6K in the last year) but am now unemployed and can't make more than the minimum payments so am concerned about how long the bills will pay off. I'm also concerned about my future ability to pay in a few months if I don't find a job in the next month or two. Is debt consolidation program or settlement a good option for me? Is it better for me to call Citibank and try to handle this on my own or to have a neogitation company do it? I haven't tried calling Citibank to see what they could offer for a lump sum settlement. As of now, I'm in good standing with Citibank, current on all my payments, and they do not know I'm unemployed. I did have two late payments this year (because I was traveling and irresponsible -i.e. forgot until it was too late) and have been carrying a balance of 10K+ for at least the past 4 years. Will they even entertain a debt consolidation program or settlement offer if I am current on my payments? I should also mention that while I don't have the money to pay off the lump sum if Citibank will agree to it, I could likely borrow it from a family member who has offered and pay it back with no interest. Thanks in advance for any advice. Last edited by Jean Gordon; 12-21-2009 at 04:51 PM. 
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12-21-2009, 07:19 PM
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Quote:
You may also read some of the old discussions on Citi bank settlement to get some idea about the creditor.
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12-24-2009, 05:11 AM
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Join Date: Dec 2009
Posts: 9
Credits: 278
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I prefer to a credit card negotiated settlement....For example if you owned $5000 on a credit card and made a negotiated agreement with Credit Card company to pay $2000 instead of $5000 as settlement in full on the debt.
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12-24-2009, 05:17 AM
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You need to talk to them about a hardship plan since you are current.Most cards won't settle until you are behind.
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Cajunbulldog Keeping an eye out for consumers. http://www.ftc.gov/os/statutes/fdcpa/fdcpact.htm#809 http://www.ftc.gov/os/statutes/fcrajump.shtm http://www.debtconsolidationcare.com.../about216.html Use this letter to protect your rights under the FDCPA myfairdebt.com & myfaircredit.com-Good source of case law in forums.
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