Does Your Situation Qualify You For A Debt Consolidation Program?

Are you considering a debt consolidation program to help solve your current financial difficulties? If you are then you may be curious to learn two important things.

  1. How much could you save by working with a reputable debt consolidation company as opposed to "going it on your own"?
  2. Do you even qualify for debt consolidation?

Sidebar: Debt consolidation is also called debt management and the two terms are often used interchangeably. A third term, "credit counseling", although used by some people to refer to debt consolidation/management, is not the same thing. It should also be noted that debt consolidation is not the same thing as a debt consolidation loan.

How Much Can You Save On A Debt Consolidation Program?

Let's tackle the first question 'first', ie. how much could you save?

A solid debt management plan, put together by an experienced credit counselor, will save you money by reducing the interest rates that you are currently paying on your unsecured debts. And, in addition to negotiating lower interest rates with your creditors (sometimes as low as 0%), the credit counselor may also negotiate lower monthly payments on your behalf in order to relieve some of the burden that your debts are having on your other monthly financial obligations.

Example: If your current credit card debts total $10,000, and the interest rates you are being charged are 20%, by getting those rates reduced to 0% you would be saving about $166 per month.

Do You Even Qualify For A Debt Management/Consolidation Program?

Question number two. Do you qualify for such a debt relief program?

To determine this, answer these questions...

  1. Is the sum of all you unsecured debts $2500 or more. (Debts such as a mortgage or a car loan do not qualify for this type of debt consolidation.)
  2. Do you have two or more unsecured debts (for example, two separate credit card debts)?
  3. Can you continue to make monthly payments toward your debts?

If you answered with three "yeses", then a debt management program may be a good fit for you. The best way to find out is to get a free, online estimate of what your savings could be. There are several reputable companies that offer this service and the best part is that there is no commitment on your part. If a company asks for a commitment up front, look elsewhere.

And if you answered "no" to at least one of those questions, then you may want to look at some other options for solving your debt problems.

Money Is Not All That A Good Debt Consolidation Program Will Save You

In addition to saving you money, working with a credit counseling company can save you two more things.

First, because they will now be the ones dealing with your creditors, they will save you a lot of stress and time.

Second, they can save you from getting into more debt in the future. One of the things that you should receive from a good debt consolidation program is help to improve your money management skills. In addition to that, they will help with the preparation of a solid personal or household budget so that you will avoid future debt problems like you are experiencing now.