Credit Consolidators

Well in lots of terms isn't this a catastrophe about to happen? Not always I guess but as I drove to the office this morning I heard a commercial for those in financial trouble (which we're told is a lot of people nowadays) to use the services of a debt consolidating company. Would I do it? Not unless I was dragged kicking and screaming and put in a dark hole. Why not? Because I believe I can negotiate my own situation should I need to. But not everyone is me.

In one of my companies (small business landscaper) I arrived on the scene too late. Mark (not is real name) had been in financial trouble from the year before trying to keep his dream company alive. What he did was apply for and use lots of credit cards. On top of that he had office rent and two daughters in private high school. He was a stubborn sort and as I like to say, "knew enough to be dangerous". That he was. He allowed a credit consolidation company talk him into peace of mind. Well he might have gotten the peace of mind but I didn't when I was doing his books. What I found what that he was paying a large amount of cash to a credit consolidation company. Some of it went to pay all his creditors the company had supposedly negotiated with and a fair amount went to the consolidation company to pay for the division of monthly cash Mark sent them to make all the payments needed. Not only did I see the amount of cash the consolidation company was taking from the one payment Mark made per month but in reconciling all his credit accounts every month I found late payments because the payments from the consolidation company weren't made on time costing Mark more money. I saw a very small reduction in interest rate and an immediate close of the cards, not a restructuring. Credit Card companies encourage you to either get a consolidation company if you have too much debt or buy the infamous credit protection plan. (More on that another time.) What they don't tell you is whether or not they will cancel your card the minute you employ a credit consolidation company for them to talk to. Most of them automatically close your account with little hope of reopening it again. What you have to be careful doing is checking the amount the consolidation company asks you to pay them and what is left over to reduce your debt on a monthly basis.
You can actually do what they do yourself. Call your creditors and plead your case with sincerity and truthfulness. Many times you will find a customer service agent who will be more than willing to help you. Once in a while they will go that extra mile with you if you are pleasant, cordial and at least acknowledge that they do the best they can.

Would I use a debt consolidation company? Nope not on your life. I don't believe the investment is close to being worth the outcome.




The credit