3 Myths About Debt Consolidation

I recently read a story in CNN Money about a less-than-scrupulous company claiming to provide some unrealistic debt consolidation services. The more I read, the more I hear stories about people falling for these "con-sters."

Debt consolidation agencies often promise an immediate increase in credit score, relief in a short time period, or zero interest rates, none of which are realistic. They often prey on the weak, because they know there are thousands of people in bad credit situations they’ve dug themselves in with credit debt.

Despite our financial circumstances, we often find ourselves in tough financial spots and can’t see our way out them. We are never going to get out of debt if you're not dealing with a good debt consolidation company, so the investigation process is crucial. But be extremely careful not to fall prey of unscrupulous debt consolidation companies that are only in the business to con people out of their financial distress. Here are some common myths and facts to consider about debt consolidation I recently came across:

Myth: Getting out of debt is easy.

Debt consolidation companies can fix your credit profile easily and help you increase your credit score.

Fact:
All these claims are unrealistic, Nobody can erase your past credit history, the most this debt consolidation companies can do is work with you to improve it over time. We all know that getting out of debt is a tough road. Sure, it’s a bumpy ride, but it’s worth it. It takes a lot of will, discipline, courage and helps to slay the debt monster. But it can be done.

Myth: We can clean up your credit your credit history

Debt consolidation companies can entirely ‘clean’ your credit report of all of the bad marks.

Fact:
This is an outrageous lie, not only can they not clean your credit history, it’s illegal. The only items that can be removed from your credit report are debts that are inaccurate. The only way you clean up your credit report, is by paying your bills on time. And this takes a little while. I found and excellent site on the internet called www.creditdemystified.com which helps clients with free tools such as credit repair and home loan guides, debt-consolidation workbooks, and several podcasts on how to remove negative information and improve credit ratings.

Myth: Only a debt consolidation company can help me get out of debt.

The TV commercials recommend I need these services to consolidate all my debts.

Fact:
To be real honest, you don’t need a debt consolidation company at all. These companies can’t do anything you can’t do on your own. Nobody knows your situation better than you. Debt consolidation companies, even the "non-profits", are in the business to make money. The debt will continue to be there, as are the habits that caused it - you just moved them! You can't borrow your way out of debt. You can't get out of a hole by digging out the bottom. Real debt help is not quick or easy.

Alternatives to consolidation

If you are looking for a way out debt, here are some other available options I found:

1. Non-profit credit counseling agencies that will work with you to establish a plan to get out of debt. They will even provide free counseling if it’s determined that you can’t afford to pay. A good counselor will work closely with the person to help them understand their situation and establish a budget so they can get back in the good graces of their creditors.”

2. Debt management services: There are numerous debt management services that will work as an intermediary between you and your creditors. They will help you work out a repayment schedule, generally at a reduced interest rate.

3. Negotiate your own deal: Creditors are business people, and some will be willing to work with you to develop a payment arrangement. This will take some legwork on your part, but it could save you fees that you'd otherwise pay with a debt management service.

No matter which method you choose for consolidating your debt, what's most important is that you take action. Whether you use a debt consolidation loan or one of the alternatives listed here, the key is to make spending binges a thing of the past, and better financial times a permanent part of your future.

Article Source: http://www.yourarticle.info

If you are interested in improving your credit score or need more information on credit-related topics visit: creditdemystified.com

To find a credit counseling agency near you, use the AICCCA's Find a Counseling Agency page

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