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# Are Debt Consolidation Companies Needed?

Developing a solid, workable debt reduction plan is crucial is to anyone who has set a goal of being debt-free. Once you have the desire to go forward, you’ll have to decide if you feel capable and confident enough to put together and implement a plan yourself, or if you want the help of a professional debt consolidation company.

Basically, a debt consolidation company negotiates with your creditors in order to reduce the interest rates that you’re paying, and working out extended payment terms which allow you to meet your financial obligations. Then, they work with you to devise a financial plan that will help you to meet the negotiated terms, making one payment that the consolidation company disperses to all of your creditors. The debt consolidation company is compensated from the fees that you pay, and, in some cases, from the fees that they receive from creditors as well.

Some debt consolidation companies will actually lend you the funds to pay off your credit accounts, allowing you to make the one monthly payment to them to retire the debt. If, however, the services you that you receive from the debt consolidation company go no farther than negotiating with your creditors on your behalf, then you can certainly perform the same services for yourself and save the fees that you would pay.

For example, you can call your creditors yourself to negotiate an interest rate reduction and work out a manageable repayment plan. Many creditors are actually very happy to do this. They will see you as being proactive and much more responsible toward your obligations, and will quite readily work with you. You can also create a budget for yourself, which will help you to take control of your finances by showing you where your money goes and where any problem areas may lie.

If, however, you are unable to successfully negotiate with your creditors, either because you simply don’t feel competent to do so or you failed to meet the obligations of a previous settlement plan, then using the services of a debt consolidation company may be the most prudent way to handle the your situation. There are times when it’s worth the fees incurred to gain the expertise of professional assistance.

There are many unscrupulous and just plain worthless debt consolidation companies out there. There are also some very good ones that perform a worthwhile service and care about their clients. If you do decide to work with a debt consolidation company, be very careful and use due diligence when making your selection. Do in-depth research and comparisons on any companies that you are considering. Never sign anything without checking the company first, and without being absolutely sure that you understand all terms, rates and fees involved. Check for any complaints that may have been lodged with the Better Business Bureau. This will help you to weed out and avoid any predatory companies.

It must be stressed that there is nothing which a debt consolidation company can do for you (short of lending you money) that you cannot do for yourself. There are advantages to using a professional company, and there are advantages to doing it on your own. A thorough assessment of your financial situation and your own abilities will help you to make the best decision.

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