Debt Consolidation: Do You Need a Third Party?

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When people come to the conclusion they need help getting out of their financial hole they find themselves in, one of the first questions is “do I need someone to help me, or can I do this by myself?” That being said, the question now becomes “where do I turn?” There are a number of ways to go about this, but in this article we will look at whether or not you need to go the route of debt consolidation.

There are several debt consolidation agencies today that are well able to offer their debt consolidation counseling services…for a price. The trick is finding one that has your best interests at heart and is willing to genuinely help you in your hour of financial need. To find the best debt consolidation companies out there is only part of the battle; it is vital that you get all the debt consolidation information in front of you before moving ahead with a particular debt management agency.

You need to ask yourself the following questions before moving ahead and then know with certainty that you not only need to consult with a debt consolidation organization, but to then find the best debt consolidation company for you that will give you the debt consolidation counseling you need to get out from under your mountain of debt:

• How much debt do you have?

If your total debt load is less than $10,000, you are more likely able to negotiate personally with your creditors and arrange a payment schedule that better fits your financial situation. For example, it is your right to be able to negotiate your interest rate on your credit cards. If this is you, it may not be necessary to go with a debt consolidation company and, as such, you can save some money by doing this yourself.

• Will your credit score be affected?

If your credit score is in good shape, you may not want to seek financial assistance from a debt consolidation agency. If you do, they will most likely have to report to your creditor the extent of your financial condition and this can negatively affect your credit ranking.

• What is the cost?

As has already been stated above, if your total debt load is less than $10,000, and you can negotiate your own debt repayment program with your creditors, the expense of hiring a debt consolidation agency may not be worth it cost-wise.

• Have you looked at ways to tighten your budget?

Often, when confronted with an overwhelming debt load, there are some ‘extras’ that we could do without. Anything from canceling that cable service to consolidating your driving trips into town can help reduce your total cash flow each month. This money could then be applied to paying down your debt. If this works for you, you probably won’t need the added expense of a debt management agency in order to get your debt under control.

• Have you been through financial counseling before?

If you have been down this road in the past, you probably already know what they are going to tell you: you need to stop spending and running up debt! If you have received debt consolidation counseling in the past, maybe you could draw from that debt consolidation information you already possess and apply it to your current situation.

• Are there other options?

Your bank or credit union might be in the position to assist you with a lower interest rate, due to you being a member in good standing. It is often the case that they appreciate your honesty and are more than willing to help in any way they can to get you out of debt. Besides, it is also in their best interest, because the last thing they want is for you to default on your debt. Ask them if they have any suggestions that can benefit both you and them.

Debt consolidation is not the only answer to help with credit card debt. By considering the above suggestions, you may just find that you can do this yourself and, as a result, save even more money that can then be applied to getting you that financial freedom you desire!

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