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Overcoming the Intimidation of Debt Consolidation

What does a debt consolidator want from me?
They will want the most recent statements from all of your creditors. These statements should include the total amount owed and the account number. Also, they will need your most recent paycheck stubs. This will give them an idea of your income and expenses. They will also want a log of your monthly financial activity. This will include transportation, laundry, groceries, clothing, rent/mortgage, utilities, medical/dental, child care, child support payments/alimony, insurance, education, entertainment, etc. This will tell them where your current income is going.

What does the debt consolidator do?
The debt consolidator will work as a middleman between you and your creditors, making payment arrangements on your behalf. They will explain their role and provide your creditors with the information needed to understand your reason for consolidating. The creditors will then work with the consolidator to negotiate payments that both parties (you and the creditor) agree is acceptable.

A plan will then be put into place for you to get all of your debts paid. It will be a combination of a budget and education to pay off debt and prevent making the same mistakes financially in the future. The amount that you pay your consolidator will depend on the total of the debts that you owe specifically, your income, and the consolidator's fees.

You will receive a statement from the debt consolidator every month. It lists your debts and the agreed upon monthly payments. You will pay the debt consolidator, and they will then distribute your funds to your creditors. You will continue to receive statements from your creditors. The difference is that you will now be seeing the amount owed going down instead of going up. As this happens, the consolidator statements show the elimination of these accounts as they get paid off until you owe nothing. This is how you work your way out of debt!

What are the benefits of debt consolidation?
Debt consolidating slows the bill paying process down so that you may catch your financial breath. They can negotiate lower monthly minimums which is not something that you could have done on your own. This all makes paying your bills more manageable.

When you are falling behind on your bills, your creditors will put that on your credit record. Working with a debt consolidator will be a positive mark on your credit record because it shows a responsible effort by you to pay off all of your debts. In essence, you learn to make your credit work for you instead of against you. This raised awareness about your credit is the educational aspect you will receive in working with a consolidator.

A debt consolidator can help you by preventing creditors from further pursuing negative avenues such as tasking you to collections or court. They do this by opening the lines of communication between you and your creditors. Ultimately, they help you gain control of your financial future.

All of these benefits in using a debt consolidator make you more aware of your spending habits, and this awareness makes you less likely to incur more debts.

The question is: why shouldn't I consolidate my debts?
There is no good reason not to give debt consolidation a try. If your financial problems are too big to be handled by a consolidator, they can point you in the right direction. Debt consolidation is a step that should not be skipped in the process of solving your financial problems. Something like bankruptcy has negative consequences on our credit record that are long lasting and challenging to maneuver around. Debt consolidation is worth a shot to avoid that avenue.

When should I consolidate debts?
When you are heading down a path toward spending more than you make, debt consolidation could be the answer that you are looking for. When you have no idea how much debt you are in, debt consolidation could be the answer that you are looking for. When bills are causing you stress in your life, you get the idea…. the sooner, the better for consolidating. Grab a hold of your finances now before the problems you are having compound.

Debt consolidation will be a decision that will give you much relief from your present financial situation as well as the empowerment you need to make better decisions for your financial future

This article was written by Heather Dossey.