It is no surprise that the number of companies that specialize in helping you consolidate your debt, has suffered a spike. They have sprung up with all kinds of catchy names and marketing appeal that has turned the debt consolidation business into a billion-dollar industry.
They promise to bring down your monthly payment and make you debt free in under three or four years. But the promises are hallowed and the paperwork in- volved deceitful. The case a coworker is the perfect example. She had an $18.000 debt split into four creditors. She was promised to be free from this amount in 3 years if she agreed to pay $ 322.00 a month. She did but a year in, the payment increased to $ 522 a month.
Some creditors did not accept the offer made by the debt consolidation company and since she stopped the payments she was sued. The company then approved her for a loan through one of their subsidiaries for the full amount, which she accepted. The interest was high (29% ) but she could closed the accounts. When she is done, it will cost her $ 32.000 . So she went in for $ 18.000, and ended up with a $32.000 loan in a 5 years term. They use a what they call a “roper”, somebody who can sweet talk the bark off a tree.
Then the offer of a debt free future rings loud in the ear of people mired in debt and since everything is done right out of the comfort of your home computer, the deal is done and sealed before you know it. These companies have trained personnel with professional demeanors and pleasant voices. The deploy the old “hurt and rescue” technique. They first make you believe that you will never be able to pay your debt on your own. Then they repeat the magical
words “debt free” which send you looking for your pen. Forget reading the fine print, the document is made of at least 30 full pages of small print. Nobody reads that. A Debt can be managed in many other ways that is not detrimental to your credit. You can go to a local Credit Union or even your own bank and request a loan to consolidate the debt into one single payment. This is an option you should explore before you make any decisions. So If you find yourself watching TV at a late hour and you stumble on to one of those debt consolidation commercials, do yourself a favor and change the channel.