1What Exactly does a Debt Combination Company Do?
Debt combination is another term for debt settlement, and companies provisional of this service directly deal with your creditors, who are unsecured towards the negotiation of a lower amount due. You pay an agreed upon single monthly payment to a third party escrow and that money is brought into use to shell out the settlements as well as the company fails. Whilst there is no guarantee for anything, usually, you can diminish the amount owed by you up to 40 to 50 percent.
2Can I Still Make Use of My Credit Cards While Going through Debt Consolidation?
No is the answer. The idea behind this is the reduction of your debt and not its enhancement by further usage. You will have to begin dealing in cash, although with the lowest monthly payment that you will make, this will be easier to do.
3Will My Credit Score Be Enhanced After I Accomplish a Debt Combination?
Again, the answer is no. Your credit report was pretty much trashed when you commenced the program and it won’t be any better after a settlement. Think about it for a moment, really what you have done is paid 60% or less on that which was due. That doesn’t build a credit score. But completing the program has the implication that you no longer make the monthly disbursement, and you can use that money for secured loans and begin to build the backup of your credit.
4Will the Creditors Stop Calling me if I’m in a Program?
Probably, but there is no guarantee. Reputable companies of debt settlement are having relationships with credit card companies and they usually convince them to deal directly with them. However, your creditor has the option to continue the collection efforts if they desire so.
5Can I Choose the Date of Payment?
If you are dealing with a reputable credit settlement company, you can choose whatever date of the month that is the most convenient for you.
6How Long Does this Process Last Until I’m Free of Debt?
Once again, no guarantee is there, but on average, your debt ought to be totally settled and paid for within 36 months. You can expect that the initial settlement ought to happen sometime in the first 12 months. The amount of your negotiated debt and the amount that you are paying in will ascertain just how fast the whole debt will be removed.
7Are Credit Cards the only Kind of Debt that this Program Accepts?
The answer is no. An unsecured debt like medical bills, utility bills, personal loans or retail credit cards can be included. Secured loans like mortgages and car loans cannot be through this process.
8Do Non-profit Credit Counseling Agencies Operate as a Free Service to the Debtors?
Obviously, the answer is no. A credit counseling agency is labeled non-profit not because they have federal sanctions and endorsements, but due to the fact that they have filed for property tax. These agencies charge debtors since they too have payments to make for utilities and pay their employees.
9Does the Non-profit Credit Counselor Incur any Costs for these Services?
The services provided to you by the non-profit counselor involve a significant amount of administration costs. Therefore, while an individual is justified in questioning why he has to disburse for a non-profit service, he must comprehend that there are certain incurred costs that need to be repaid. After all, these are the incurred costs on your behalf in the negotiation with banks and financiers.
10Why Should I Disburse for a Service that I Can Undertake on my Own?
Of course, you can undertake this exercise on your own and try to negotiate with the banks and credit card companies to diminish your debt, but you will soon realize that the non-profit counselor as a neutral party will be able to do a better job. After all, he/she is qualified and certified to do the job.
11How do I Opt for a Non-profit Counselor, Who has my Best Interests in Mind?
It is imperative to opt for the right non-profit counselor and get all the anticipated services from him. Several so-called agencies of non-profit counseling end up making huge profits, as they are disbursed by the creditors for the collection of money on their behalf and might work toward recovering debts rather than giving you sound financial advice future wise. They have authorization from the government to offer services to individuals, who have the requisition by law to undergo counseling prior to their being eligible to file for bankruptcy protection. You can appoint an advisor from the approved list (even if you are not filing for bankruptcy) to assure yourself that the counselor will focus on getting you profitably out of debt.
12Is the Credit Card Debt Combination a Loan?
Well, the answer is no. Credit Card Debt Consolidation is a repayment plan negotiated in the midst of you and your creditors. But you can get a loan for purposes of consolidating your debt. But this will not be the same as debt consolidation.
13What is the Diversity in the midst of Debt Consolidation and Debt Settlement?
Debt settlement and debt combination are similar as they both pay off your current creditors and simplify your unsecured debt into one monthly payment. There is one key diversity. Debt combination disburses off your current credit card debt in full. With debt settlement, creditors are negotiated with to get a lower balance. This will be of great assistance for accounts that are severely charged off. If you can afford, debt consolidation is a much better fiscal option for your credit.
14Can the Debtor’s Wage be Garnished to Reimburse a Credit Card Debt?
It is entirely dependent on whether the state where the individual is working will permit personal wage garnishment. All states do not allow wage garnishing. But, the wages can be garnished just after a creditor gets a judgment from the court.