Consolidating loans pros and cons
If not, your credit standing and your credit score will be severely damaged for quite a while.
What the debt settlement companies fail to tell you is that when you settle a debt, the lender, collector, or credit card company will report the debt as “settled for less than agreed” or “settlement accepted,” damaging your credit report cards for seven years.
Another great thing about legitimate credit counseling services that offer DMPs is that they can also help you evaluate your debt situation, and if you’re not a good candidate for a DMP, they can help you determine if bankruptcy is an option — always a last resort, but there are cases where it’s the only option left.
Before you decide on a credit counseling service, make sure they are legit.
You can do this by verifying that they are a member of the National Foundation for Credit Counseling by visiting their website or by calling 1.800.251. A HELOC, or a home equity line of credit, is a revolving line of credit secured by equity in your home.
That line of credit can be tapped and used for whatever you like; to pay off debt, to buy a car, to pay college tuition, or just to have as an emergency fund.
– Settlement companies with a proven track record of getting clients out of debt will have a long line of people willing to testify to that effect.
Another drawback is that while you’re paying the settlement company, most won’t tell you exactly how much of your monthly payment is going towards your debts and how much is actually being deducted as their “fee.” It goes without saying that you do NOT want to get scammed by a debt settlement company.Because a HELOC is secured by the equity in your home the bank can foreclose on your house if you don’t pay back the loan.For some people that’s far too much of a gamble just to pay off a little credit card debt.Debt settlement isn’t the only option for people who are swimming in debt.
If you’ve tried debt management on your own and are still struggling and need help, you may want to consider a Debt Management Program (DMP).DMPs are often run on a non-profit basis through a consumer credit counseling service, and have no motivation other than wanting to see ordinary people get out of debt.