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What is Debt Consolidation?

"Drowning in debt? Give us a call today and we'll get those creditors off your back for good!"

We've all heard the claims from debt-consolidation companies. The catchy television and radio commercials - promising to remove debt and make the endless phone calls from creditors stop - can be enticing for those who truly are drowning in debt. Desperate people can and do fall for these pitches every day, and end up with worse financial troubles than those with which they started.

The Better Business Bureau warns consumers against debt consolidation companies which make the following claims:

  • The ability to remove all debt
  • Warns clients against communicating directly with creditors
  • Offers to pay down debt for an upfront fee from the client
  • Asks client to pay a percentage of the total amount of debt being eliminated
  • The ability to remove negative marks on a client's credit report
  • The ability to prevent bankruptcy

For every bogus debt consolidation company out there, a legitimate service exists that truly can help consumers who are overwhelmed with debt. But how do consumers tell the difference between a valid company and one that is just out to scam them?

To answer that question, a consumer must first understand what debt consolidation is and what it is not.

The way true debt consolidation is supposed to work is to take multiple sources of debt - such as from credit cards, mortgages, utilities and loans - and combines them into one manageable monthly payment. Properly combining debt can allow the consumer to still meet their financial obligations without draining their bank account each month.

True debt consolidation also should provide certain key benefits to clients who use a debt consolidation service.

One of the biggest benefits to debt consolidation is the reduction of interest rates on loans and credit cards. A big reason consumers get behind on payments and are unable to ever truly pay off debt is because they often are saddled with high interest rates. Even if they make the minimum payment each month, they may never realistically pay off the full amount due to compounding interest rates from month to month.

A quality debt consolidation service will make it a top priority to combine all debt and reduce the overall interest rate being applied to the monthly repayment process. If the company you have chosen does not offer this tactic, then they are not a company with which it is worth doing business.

Debt consolidators also should be able to combine all sources of debt into one monthly payment, and reduce or eliminate all late penalties and fees for their clients.

The Best Debt Relief Companies Compare Debt Relief Companies Compare Debt Relief Company Reviews What are the best Debt Relief Companies Best Debt Relief Company Reviews

Debt Relief Company FAQ

Debt relief is a process that helps people get out from under their ever-mounting financial obligations. This can be accomplished through Debt Negotiation, Debt Settlement, Debt Consolidation or Repayment Plans, among other strategies.
You'll need to have a certain amount of debt to be eligible for debt relief, which varies according to which relief service you choose. Some require a minimum unsecured debt of $7500, while others specify that you need to owe at least $10,000. Also, some debt relief providers aren't licensed in all 50 states - so you may be eligible for debt relief but the service you're considering isn't available in your state.
Believe it or not, many debt relief services are free! Most providers give you a no-cost consultation, analyzing your financial situation and making recommendations tailored to your needs. But, there are some fee-based services, especially if you want someone to negotiate with creditors on your behalf.
Many of the strategies used by debt relief providers can be done on your own, yes. But, in the amount of time it would take you to get up to speed and learn what those strategies are, you could be paying hundreds (or thousands!) of dollars in interest. It's almost always a smarter financial move to have the experts do the work for you.
The first step is usually the complimentary consultation, where a representative will go over your debt situation and find out your goals, needs and timeframe. From there, it will depend on which approach you decide to take - but, for the most part, the debt relief service will be in charge of contacting your creditors and working out the details for reducing what you owe.
No two consumers are alike - and debt relief strategies vary as well. Some services offer relief through a personal loan, allowing you to pay off high-interest debt with a lower-interest arrangement, so naturally your situation will change as soon as your loan is funded and used to reduce your monthly payments. On the other hand, if your service is negotiating with your creditors to reduce or eliminate what you owe, that can take several weeks to months.
Most of the time, there isn't. A few debt relief services offer a 100% customer satisfaction guarantee, allowing you to cancel your plan without fees or penalties. Read the fine print of any contract before you sign up, so you'll know exactly what's promised - and what isn't.
Debt relief may sound too good to be true, but it's a legal, well-known method for reducing the debt burden faced by many consumers. Although some fly-by-night services pop up from time to time, most companies offering debt relief have been in business for a decade or longer. You can always check for a company's listing with the Better Business Bureau for further confirmation that it's a trustworthy option for debt relief.

Compare Debt Relief Companies

Select any 2 Debt Relief Companies to compare them head to head

debt-relief-programs
  • National Debt Relief
  • Credit.org
  • Curadebt
  • Upstart
  • SoFi
  • LendingTree
  • LendingClub
  • CareOne Debt Relief Services
  • American Debt Enders
  • Accredited Debt Relief
  • OneMain Financial
  • Savvy Money
  • Debt Consolidation Care
  • Fast Track Debt Relief
National Debt Relief vs Credit.org National Debt Relief vs Curadebt National Debt Relief vs Upstart National Debt Relief vs SoFi National Debt Relief vs LendingTree National Debt Relief vs LendingClub National Debt Relief vs CareOne Debt Relief Services National Debt Relief vs American Debt Enders National Debt Relief vs Accredited Debt Relief National Debt Relief vs OneMain Financial National Debt Relief vs Savvy Money National Debt Relief vs Debt Consolidation Care National Debt Relief vs Fast Track Debt Relief Credit.org vs Curadebt Credit.org vs Upstart Credit.org vs SoFi Credit.org vs LendingTree Credit.org vs LendingClub Credit.org vs CareOne Debt Relief Services Credit.org vs American Debt Enders Credit.org vs Accredited Debt Relief Credit.org vs OneMain Financial Credit.org vs Savvy Money Credit.org vs Debt Consolidation Care Credit.org vs Fast Track Debt Relief Curadebt vs Upstart Curadebt vs SoFi Curadebt vs LendingTree Curadebt vs LendingClub Curadebt vs CareOne Debt Relief Services Curadebt vs American Debt Enders Curadebt vs Accredited Debt Relief Curadebt vs OneMain Financial Curadebt vs Savvy Money Curadebt vs Debt Consolidation Care Curadebt vs Fast Track Debt Relief Upstart vs SoFi Upstart vs LendingTree Upstart vs LendingClub Upstart vs CareOne Debt Relief Services Upstart vs American Debt Enders Upstart vs Accredited Debt Relief Upstart vs OneMain Financial Upstart vs Savvy Money Upstart vs Debt Consolidation Care Upstart vs Fast Track Debt Relief SoFi vs LendingTree SoFi vs LendingClub SoFi vs CareOne Debt Relief Services SoFi vs American Debt Enders SoFi vs Accredited Debt Relief SoFi vs OneMain Financial SoFi vs Savvy Money SoFi vs Debt Consolidation Care SoFi vs Fast Track Debt Relief LendingTree vs LendingClub LendingTree vs CareOne Debt Relief Services LendingTree vs American Debt Enders LendingTree vs Accredited Debt Relief LendingTree vs OneMain Financial LendingTree vs Savvy Money LendingTree vs Debt Consolidation Care LendingTree vs Fast Track Debt Relief LendingClub vs CareOne Debt Relief Services LendingClub vs American Debt Enders LendingClub vs Accredited Debt Relief LendingClub vs OneMain Financial LendingClub vs Savvy Money LendingClub vs Debt Consolidation Care LendingClub vs Fast Track Debt Relief CareOne Debt Relief Services vs American Debt Enders CareOne Debt Relief Services vs Accredited Debt Relief CareOne Debt Relief Services vs OneMain Financial CareOne Debt Relief Services vs Savvy Money CareOne Debt Relief Services vs Debt Consolidation Care CareOne Debt Relief Services vs Fast Track Debt Relief American Debt Enders vs Accredited Debt Relief American Debt Enders vs OneMain Financial American Debt Enders vs Savvy Money American Debt Enders vs Debt Consolidation Care American Debt Enders vs Fast Track Debt Relief Accredited Debt Relief vs OneMain Financial Accredited Debt Relief vs Savvy Money Accredited Debt Relief vs Debt Consolidation Care Accredited Debt Relief vs Fast Track Debt Relief OneMain Financial vs Savvy Money OneMain Financial vs Debt Consolidation Care OneMain Financial vs Fast Track Debt Relief Savvy Money vs Debt Consolidation Care Savvy Money vs Fast Track Debt Relief Debt Consolidation Care vs Fast Track Debt Relief
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