Which Is Safer, Consolidation Loans or Debt Consolidation Credit Counseling?

Which Is Safer, Consolidation Loans or Debt Consolidation Credit Counseling?

Well, we first want to know what each of them entails. So what does a debt consolidation LOAN consist of? A consolidation loan is a type of loan issued in an attempt to pay off all outstanding debts that a consumer may have. With a consolidation loan, one payment is made monthly to the loan company instead of writing multiple checks to various creditors. While this may sound ideal to most consumers, it's about the only benefit you'll receive from a consolidation loan.
Taking a consolidation loan to pay off other debts is often referred to as ‘Robbing Peter to Pay Paul.' You haven't eliminated the debt, just combined it all into one place. Usually, a promotional interest rate is offered as an incentive but the qualifications to obtain this great rate are about as hard as it is to get a Platinum American Express Card on your 18th birthday. The consumers who are eligible for these out of the world super fantastic rates are usually the people who don't have any issues with their credit debt. Most consumers who take on a debt consolidation loan end up with the same amount of debt years later after taking out the loan and at times it is even more than you started with.

Well then how does debt consolidation credit counseling help?
A credit counseling program is not a loan but has similar characters that can easily confuse a consumer between the two. The credit counseling agency negotiates the current terms of your credit cards to lower the monthly payment, reduce the interest rates, and stop any late, past due, or over limit fees the consumer may be incurring. The consumer sends their payment to the consolidation company each month and they then send payments to each creditor in the program under the new terms and conditions arranged by the credit counseling agency on behalf of the consumer.
As long as the consumer makes their payment consecutively each month to the credit counseling agency their credit should not be affected negatively by enrolling in the credit counseling program and the reduced rates stay in place until the debt is eliminated. A credit counseling program basically allows a consumer to payback their debt at reduced rates without any additional mafia fees from the creditors with the convenience of ONE MONTHLY PAYMENT.
Whichever is right for you, robbing peter for paul or taking advantage of paying through a third party to receive reduced rates, you'll want to be sure the company you hire is reputable and has your best interest at hand.
Well Mr. Author how do I go about doing that?
Start by checking the company out with the Better Business Bureau, http://www.bbb.org . They should have a good rating with them outlining customer service and success rates. You'll also want to work with a certified non-profit agency. In credit counseling, a non-profit agency usually has nominal service fees and can sometimes provide better rates with the creditors working as a non-profit.
If you'd like more information about the different types of financial services available and learn more about your options on how to resolve your debts based on your specific situation please feel free to contact one of our certified credit counselors at 800.905.1563 or http://www.freedomdm.org/