Debt Consolidation Frequently Asked Questions

What is a debt consolidation loan?
A debt consolidation loan is the process where you take out a loan in order to pay off all of your loans at once. Doing this allows you to have one loan with only one interest rate which makes it a lot easier for you to manage and budget for. This is usually done by individuals that have several different outstanding loans with high interest rates.

How much am I able to reduce my monthly payments by?
The amount that you are able to reduce your monthly payments by will vary from situation to situation. It depends a lot on how much you currently owe, how far behind you are on your payments, and how much time you would like to take to pay down the balance of what you owe. Though some monthly reductions can be as high as 70%, most of the time they are around 40% of the balance that you owe, simply from reducing the amount of interest that each of your loans have.

When will my creditors stop calling me?
When you sign up with a debt consolidation program, most of the time you will stop getting those annoying calls within one to two months of starting with the program. This is because most debt consolidation companies will contact your creditors and demand that they stop contacting you because you are in the process of settling up your debt with them.

Can I send more money in each month to pay off my debt faster?

Yes you can. In fact, this is probably the best case scenario for getting out of debt as quickly as possible. The quicker that you can pay off your debt, the less money you are spending on the interest that is associated with it. So if you have the means to pay more than you need to each month, you most certainly should take advantage of it.

Can I leave the program if I feel it is not working for me?
Absolutely, any debt consolidation management program is a completely voluntary program that provides you with no obligations to stay enrolled in. It is important to keep in mind however that any special deals that were made on your behalf towards your creditors may end if you decide to leave a debt management program early.

Can I continue to use my credit cards?
The short answer is no. There is a reason that you are in this predicament in the first place. It may not be directly related to the use of your credit cards, however, they are typically the most expensive part to deal with. Credit cards will always have the highest interest rates attached to them, so using them will only further your debt over the course of a debt consolidation program.

Is debt settlement the same as debt consolidation?
They are similar, but are not the same. A debt consolidation loan is where you take out a loan to cover all of your debts in order to provide you with a much easier to manage and budget for monthly payment that only has one interest rate to deal with. A debt settlement is where you will have a company negotiate with your creditors on your behalf in order to reduce the balance of what you owe completely. This option is only for those individuals that may actually have to file for bankruptcy and where the creditors may not get anything if they do so.

Can you settle your debt on your own?

While you can in fact attempt to negotiate with your creditors in order to settle your debt, you will not gain the benefit of the relationship that most debt settlement companies have with creditors. They have proven track records with helping individuals pay off their debt so in return, they manage to get better deals than any one individual can get on their own.

Will this help me rebuild my credit?
Absolutely. As long as you stay on track and continue to make your payments each and every month, by the time you have completed your debt management program and have paid down all of your debts, your credit situation will have improved by quite a bit.

Is my information kept confidential?
Yes. Throughout the time period of your debt management program, your information is kept secure and confidential between you, your creditors and your debt management financial professional.