The scams to pay off debt effortlessly are running wild on the internet.
Here are three of the same animal with different names.
Debt Settlement Debt Negotiation Debt Arbitration All these are the same thing.
There is the slightest ring of truth to them, that is all you need to have a scam succeed.
All are being used as scams in a big way.
You can add Debt Consolidation Loans to that list.
Whatever you do Do Not Pay Debt With Debt.
What happens is someone gets deep in debt, but is still making payments.
They decide to "consolidate" their debts into a single loan.
The thinking is make one lower payment to pay off all the credit cards etc.
to free up the credit cards and take off the payment pressure.
Wrong...
What we see all to often is that the consumer has no hesitation in going out and using those zero balance cards again.
Of course they won't run them up so high again, so the "extra" payment won't mean anything.
Wrong! As the story goes, they do max out each card in turn again and now they have the consolidation loan payment as well! There is only one way to successfully consolidate debt like this.
No loan is required to do it.
The discipline to control spending is built into the program too.
It is called debt management.
Debt Management "consolidates" the debts into one payment, but pays each creditor separately.
Each revolving account becomes a separate installment loan.
The accounts involved are closed by the consumer.
The balances are paid according to the terms the debt management company has with each creditor.
The debt management company gets permanent interest rate reductions for the consumer.
Late payment fees and over-limit fees go away in these programs.
The consumer makes one simple payment to the debt management program.
Payments are disbursed to each creditor by the DMP.
The fees in a legitimate DMP are low enough to be insignificant to your interest savings.
The combination of a steady payment amount and lower interest give the consumer much more control of their finances.
We recommend the consumer keep one card out of the program for emergency use only.
The daily, run of the mill stuff is paid with a debit card.
I am sure you know debit cards hit your account immediately.
So it is like paying cash for everything.
Federal guidelines in a DMP recommend a liquidation of the debt within 60 months.
Of course you may not owe the same amount to each creditor.
So some will be paid off sooner than others.
The bottom-line here is don't use debt to pay debt.
It is a slippery slope.
If it could be done easily creditors wouldn't offer these loans.
It is in their best interest to keep you mired in debt.
Don't let them succeed while you suffer.
Hope that helps a little.