When To Consider A Debt Consolidation Program

In today’s economy, it is very common for consumer’s to find themselves overwhelmed by credit card debt and in need of debt reduction. Consumers who need more than basic budgeting to pay off debts and are having difficulties making their monthly payments should consider a debt consolidation program in order to get back on track.

A debt consolidation program, also known as a debt management program, is the process of consolidating unsecured credit card debt into one monthly payment, often with lower interest rates. Usually, this process is done by a debt consolidation company who will work with the creditors on the consumer’s behalf in order to restructure payments so that the debts can be better managed. The consumer will make a single monthly payment to the debt consolidation company each month that will be divided and disbursed accordingly to the creditors. This ensures that all creditors are paid on time and lower interest rates means more money is being applied to the principle balance. Thus, credit card debts and other unsecured debts are paid off much at a much faster rate on a debt consolidation program than they would be otherwise.

Many consumers are hesitant to join a debt consolidation program when struggling with credit card debt, because they fear such a program will hurt their credit. However, debt consolidation programs sometimes can actually improve a credit score because the debt is being paid off in full, thus improving the debt to income ratio. Debt consolidation companies commonly offer free counseling services in addition to managing debt. These services are used initially to evaluate the consumer’s financial situation and determine the best options for debt relief. However, debt consolidation companies will also usually offer post debt consolidation counseling services in order to keep the consumer on track and avoid rebuilding credit card debt and unsecured debt that got them to this point in the first place.

It is not uncommon these days for a consumer to find themselves struggling with credit card debt and unable to make monthly payments. Fortunately, a debt consolidation program is an available resource that can save the consumer thousands of dollars in payments and interest, and will eliminate the debt sooner than later.