Pros and cons to consolidating debt
Once their fee is accounted for, they promise to negotiate with your creditors and settle your debts. Well, the debt settlement companies usually don’t deliver on helping you with your debt after they take your money.
They’ll leave you on the hook for late fees and additional interest payments on debt they promised to help you pay!
The debt includes a two-year loan for ,000 at 12% and a four-year loan for ,000 at 10%.
Your monthly payment on the first loan is 7, and the payment on the second is 3. If you make monthly payments on them, you will be out of debt in 41 months and have paid a total of ,821.
So basically, your debt would go from ,000 to ,000–60,000.
If that’s not bad enough, fraudulent debt settlement companies often tell customers to stop making payments on their debts and instead pay the company.
You’re in deep with credit cards, student loan payments and car loans.
Get the facts before you consolidate your debt or work with a settlement company.Debt settlement is a scam, and any debt relief company that charges you before they actually settle or reduce your debt is in violation of the Federal Trade Commission. When you consolidate your debts or work with a debt settlement company, you’ll only treat the symptoms of your money problems and never get to the core of why you have issues in the first place.You don’t need to consolidate your bills—you need to pay them off.Here’s why you should skip debt consolidation and opt instead to follow a plan that helps you actually win with money: The debt consolidation loan interest rate is usually set at the discretion of the lender or creditor and depends on your past payment behavior and credit score.Even if you qualify for a loan with low interest, there’s no guarantee the rate will stay low.