| Wednesday, October 6, 2010 |

Debt consolidation companies

 are showing up all over the place; in television ads, in the phone directory, and on the Internet there are countless organizations who offer their services for the consumer suffering from financial burdens. A debt consolidation company does just what the name implies. They consolidate all debts into one account, reducing payments, usually over a two to four year time span. Before this actually takes place, the companies contact the creditors to negotiate a lower interest rate. Sometimes, an agency even succeeds in lowering the principal. These organizations disburse funds to the various creditors after the consumer sends a monthly payment, thus simplifying the payment procedure.

One of the requirements a debt consolidation company has when the consumer engages in their services is that the debtor must close all credit card accounts and destroy the cards. For a debtor who is used to using a credit card all the time, this requirement by debt consolidation companies is tantamount to cigarette smoker having to quit cold turkey. It requires a change in priorities and a new attitude toward buying. The credit card gave the debtor a certain feeling of security, but the debt consolidation companies are aware that this account is the very thing that got the debtor into trouble in the first place. The freedom from indebtedness and the worry that it causes is the payoff. In addition to credit consolidation companies that are in business for that purpose only, there are legal firms who advertise these services also. They have the advantage of a greater understanding of the law, but their fees are higher than other organizations. Also, they often tend to steer a debtor toward bankruptcy quicker than counselors not working through a law firm.

In addition to helping a debtor get out of the trouble created by irresponsible spending, a
debt consolidation company will offer it's clients financial counseling to help make the transition. This service is just as important as the consolidation itself. If a client goes right back down the same path, the logical ending is bankruptcy, and that has long term effects on a person's credit. Debt consolidation companies are not all alike, however, and some who advertise as being non-profit are really for profit companies. It is important for a debtor to check an organization out with the Better Business Bureau before signing any agreement. Even in Biblical times, there were occasions where debtors were shown kindness. In Luke 16:5-6, there is this passage: "So he called every one of his lord's debtors unto him, and said unto the first, How much owest thou unto my lord? And he said, An hundred measures of oil. And he said unto him, Take thy bill, and sit down quickly, and write fifty."


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