Function of Debt Consolidation
Date: Mon, 09/04/2006 - 08:10
How does debt consolidation work? I was under the impression that a single payment is made to the program each month and thus the program spreads the payment out to the creditors. I just recently spoke with Link deleted as per forum rules - Mike and basicaly the way they do it is a portion of the monthly payment is taken for their service fee while the rest sits in my savings account and accrues. Is this right???
Hi Reggie. I am a member of 'freedom point' and they do it the f
Hi Reggie. I am a member of 'freedom point' and they do it the first way you spoke of. They take the money out of my bank account once a month and then send it out to the appropriate creditors for the amount of the debts. They do charge a small fee for their efforts but if you're 'hard' pressed and are having hardship, you can tell them and they will wave their fee and just take out the money for the debts. I found them through careonecredit. I have heard of some places doing what you talked about, but I have never done it that way. shirley
Quote:basicaly the way they do it is a portion of the monthly pa
Quote:
basicaly the way they do it is a portion of the monthly payment is taken for their service fee while the rest sits in my savings account and accrues. Is this right??? |
If I have understood this part of your post, you are referring to debt settlement program. Under this plan, you are not making payments to the creditors every month. Your accounts are left in default for some time while the settlement company negotiates for a 'settled' amount with your creditors. During this period, you are sending your payments at a newly opened account each month. Once the proposal is accepted, money is taken out from your account and the debts are paid off. See http://www.debtconsolidationcare.com/debt-settlement.html
You will understand the positive effects of this program only after finishing it. When you work in a consolidation plan, the accounts are current and a part of the debts are paid off every month shrinking it off gradually.
