Financial Resource

When you are in a serious personal debt crisis you will probably be aware that debt consolidation is one of the most frequently used ways to deal with this situation.  No debt solution is suitable for all situations, but consolidating your debts through a debt management plan is a tried and tested method for fairly large amounts of unsecured debt, such as credit cards and personal loans.

To consolidate your debts in this way you need to use the services of a debt management company to deal with your creditors and set up a payment plan for you.  This leads us to the problem of how to choose a company that you know you can trust to give you good advice and do a good job for you.  The reason this is so important is that not all debt management companies can be trusted to tell you what course of action is actually going to get you permanently out of debt.  Instead of looking at your finances and telling you what your options are, the temptation that many succumb to is to just advise you to do something that will make money for them.

The best companies will offer you unbiased advice and only recommend a debt management plan if it really is the most appropriate way to get you out of debt.  The best debt management companies will also offer you guidance and advice with things like budgeting and saving money if you sign up for a plan with them.  Narrowing down your search to avoid the untrustworthy companies is therefore very important, and we will look at how best to do that shortly.

Before you approach any debt management companies you should ensure that you have a basic understanding of how debt consolidation works, so that you know what you will be asking them to do for you.  This will help you properly assess their proposals.  When you agree to a debt management plan, your chosen company will negotiate with your creditors to set up new conditions for paying back what you owe.  The best debt management companies will normally negotiate reductions in interest payments and any late payment fees, so your debts should stop growing.  The new terms result in your debts becoming much more possible to repay.

Once new agreements for repayment are in place, you just make a single monthly payment to the debt management company, and no longer have to deal direct with your creditors.  This should not only be more affordable, but is a lot easier to manage and keep on top of.  It is also a big relief for most people to be free from the constant chasing by creditors.

Now that you understand what debt consolidation is, you just need to find a selection of the best debt management companies to apply to.  What you need is a good shortlist, so that you can apply to about three, which gives you a good comparison.  You can then choose whichever you feel happiest about in terms of the actual offer and the debt advisors you have been dealing with.

The safest way to arrive at your shortlist is to follow well researched recommendations for companies that are known to be well established and ethical and reputable.  You want companies that have been around for some time and demonstrated clearly that they actually deliver results for people.

Tags: Consolidation, debt, Fees, finance, Management