Debt Free Plan - Bad Credit Debt Consolidation

Bad Credit Debt Consolidation - Conflicted?

The phrase bad credit debt consolidation may make you feel bad. Don't let it. Bad credit debt consolidation is actually a very positive thing because you are making an effort to pay off your debts. You could file for bankruptcy instead, which would mean your creditors will never receive the money you owe them. At least with bad credit debt consolidation you're making an effort, and your credit score is supposed to actually be improved. If you file for bankruptcy, it stays on your credit report for many years and you can be denied credit in the future because of it.

Bad credit debt consolidation doesn't necessarily appear on your credit report, but since you're making an effort to pay, if a creditor does report it to a credit reporting agency, it's seen as a positive thing. Plus, it's not listed as "bad credit debt consolidation" on your credit report (if it appears there at all). It may show that you're participating a debt consolidation program. President Bush is even considering signing a bill that will encourage people to try debt consolidation before turning to bankruptcy. So then, wouldn't it be worth your while to learn about your options through the debt consolidation services?

A rose by any other name....bad credit debt consolidation?

You say potato, I say po-TAH-to....either way, bad credit debt consolidation is the same thing as credit card debt consolidation or debt consolidation. Here's what happens. First, you browse the Internet (the links at the bottom of this page are an excellent place to start) for a debt consolidation company and complete their no-obligation questionnaires so they know what programs to offer you and what advice to give you. Some companies offer free debt consolidation, which basically means their initial consultation with you is free. If you're a homeowner, a debt consolidation service may suggest that you look into a debt consolidation mortgage.

Most companies will offer debt consolidation loans. The amount of your debt consolidation loan will be enough to pay off your credit cards, medical bills and any other outstanding unsecured debt you have. You will pay all of these off and make one monthly payment to the debt consolidation company instead. The interest rate is usually a lot lower than what you were paying on each credit card, and they make sure the payment is an amount you can manage to pay each month.

In some cases, the debt consolidation service will make arrangements with your creditors to accept lower monthly payments and reduce the interest rate. (They may even be able to eliminate late fees and any other junk fees credit card companies like to charge.) You would make one monthly payment to the debt consolidation service and they would divide that payment among your creditors and keep a small amount for their fee. Depending on your debt and the amount you can afford to pay each month, you could be debt free in five years.

Many people who participate in a debt consolidation program have good credit, and many have bad credit. Whatever option you choose, just remember that it doesn't matter if your credit is good or bad--you're taking steps to pay it off and make it better, and that's the right thing to do.

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