Help with Debt Consolidation is but a Stone Throw Away -- Ouch!

A Credit Article Contributed by Mark Mcclelland

Need Some Help with Debt Consolidation?

After years of accumulating debt, you've finally come to the conclusion that you need some help with a bit of debt consolidation, even if it only reduces the number of payments you're making and not the amount. Whether or not this comes easily to you is less of a point than the knowledge that it's a good thing you're doing, and you and your family will be much better off, and feel much better, once it's all done.

But the first thing you need to do is figure out where to go to get the kind of help you need, and feel comfortable with, in you debt consolidation efforts. There are two kinds of organizations you can work with: a credit counseling service or a lending institution like you bank.

If you go the lending institution route, you're going to be asking for help via a debt consolidation loan, which you'll use to pay off all of your unsecured creditors (your credit cards) and then you'll be making a single monthly payment to the lending institution. If you do decide to go this route, hopefully you'll be wise enough to cut up the credit cards when you pay off their balances due, otherwise, you're likely to end up right where you started. You might even be worse off, with both a consolidation loan to pay off, as well as credit card bills... and that'd be no help at all.

On the other hand, if you go the credit-counseling route, you're going to be turning the task of making monthly payments to your creditors over to the counseling service. And this is probably the better route.

Using a Credit Counseling Service to Help with Your Debt Consolidation

When you agree to work with a credit counseling services, you'll have to provide them with a lot of information regarding your current financial situation as well as your creditors. They'll work with you and your creditors, acting a go-between, to help develop a debt consolidation payment plan that both you and your creditors can agree to. And since this is what these services do, they can often get the creditors to waive any fees and late charges, and might even be able to convince them to reduce your total balance due as well.

Once all parties have agreed to an acceptable plan, you will start making a single monthly payment to the counseling service (you certainly didn't think they were just going to give you money to pay those bills, did you? ). The service will, in turn, pay each of your creditors the agreed upon amount. Using this payment method the creditors can be assured that they're gong to be paid on a regular basis, you know that all your creditors are being paid, and the service can ensure that all parties remain true to the agreement.

The Benefit? Debt Consolidation is Sure to Help Your Credit Reports.

But regardless of the route chose, you probably wouldn't believe the positive effect your debt consolidation plan will have on your credit report - and if there's any one thing that could help it, this is it. Instead of a long trail of late and scattered payments to those 15 credit cards you owned (and owned is the operative word here as you cut them up after the plan was put in place, didn't you? ), your credit report would show a single payment, consistently made, to the credit counseling service or lending institution.