If you find it increasingly hard to pay your monthly bills and are worried about possibly losing your home, car, or other assets then bill consolidation might be a good option for you.
What does it mean to consolidate my bills?
In the simplest of terms, bill consolidation means reducing your debt by negotiating lower rates and eliminating fees from credit agencies. Bill consolidation is not a loan, although you can use a loan as part of the process. In most cases, creditors are happy to work with you to negotiate a lower payment rather than receive no money at all. Your first step should be to analyze all of your bills and income. Once you subtract all of your minimum payments from your income, then you need to make a plan on how to reduce your debts. See what extra money you have left and allocate that to the card with the highest interest rate each month. This will get you on the right track to getting out of debt. However, when it comes to bill consolidation you have two options: do-it-yourself or work with a bill consolidation company.
Do-it-yourself bill consolidation vs. using a bill consolidation company: What can I expect?
Regardless of which option you choose, there are some pros and cons of each that you need to be aware of:
Negotiation. In do-it-yourself consolidation, it is your responsibility to contact your creditors and try to negotiate a better interest rate, payment, or reduction in fees. However, when you work with a consolidation company they will contact all creditors on your behalf and negotiate for you, which often can result in a reduction of debt up to 50%.
Willingness. When you use a bill consolidation company, the creditor will be very interested in negotiating with them because they are providing a solution that guarantees they will be paid every month. Unfortunately, creditors may be less willing to work with an individual given they already haven’t been making their payments and they have no reason to believe that his will change.
Collection calls. If you are getting bombarded with collection calls, these may not stop if you choose to do it yourself, whereas, if you choose to work with a company the calls should end immediately.
Fees. Bill consolidation companies generally charge fees, unless you go with a non-profit bill consolidation company, therefore you will need to pay them on a monthly basis (usually this is calculated into your new monthly bill). Of course, if you do-it- yourself, then you won’t incur any additional fees but you may not be able to negotiate as much of a debt reduction.
If you find it increasingly hard to pay your monthly bills and are worried about possibly losing your home, car, or other assets then bill consolidation might be a good option for you.