Do Debt Consolidation Programs Help That Much?

The best way to determine whether a debt consolidation program really helps that much is to determine if it can help you in your specific situation.

If you are someone that has a lot of debt, but only three or four creditors, then it might be best to try and be your own debt consolidator.

A debt consolidation company works by paying off your debts for you. They contact your creditors, and agree upon a settlement price. Once your debts are paid off, you must pay the loan back to the debt settlement company. This makes life much easier for most people because they have loads of debt. Some people have credit histories that include 10 credit cards, and 3 book club memberships, car loan issues and other unsecured debt. This can add up to 30 or more creditors for some people. Turning this into a once a month payment is ideal.

If you have less than 5 creditors though, you may want to consider just calling them yourself and trying to work out a reduced rate. Debt consolidation agents do have greater skill in dealing with creditors, but you'll find that many of them will be fair with you if you are respectful and sincere in your desire to reach a fair price.

You've no doubt received phone calls from creditors calling you, offering you a reduced rate if you'd just pay by a certain date. Many creditors are willing to work with you even if you're not a professional financial agent.

After taking a look at your situation. You will find that debt consolidation is best for you if you have a lot of unmanageable debt.

If your debt exceeds a reasonable amount of money, then bankruptcy is your only option. Situations like this can happen when someone has an accident and no one is at fault. Without the proper health insurance, 1 week in the hospital can turn into $80,000 worth of debt. If you already had $14,000 worth of debt due to your own issues before the accident, this new debt pushes you way over the border. If you are making $8/hour, and after rent and expenses you only have $200 left over every month. You might want to consider bankruptcy instead of debt consolidation.