Instead, the debt settlement agency asks for a substantial amount of cash from you or requires you to make monthly payments until you build a sum large enough to offer the creditor a settlement.
When the agency thinks it has enough money, it goes to the creditors and attempts to negotiate a one-time settlement, generally for less than the balance owed.
A consumer can get lost on that treadmill and never get off.
That is where a debt consolidation loan comes in handy by grouping all those bills into a single debt.
Not only are your monthly interest rates reduced, credit counseling agencies can also help get debt collectors off your back.
The credit counseling agency also pays participating creditors on your behalf.
The average consumer has four credit cards, though many carry more.
The major benefit to you is that the credit counseling agency can help you get lower interest rates and try to get late-payment and other fees waived.In a DMP, you generally will have to close most of your credit cards and be on a 3-to-5 year repayment plan.When you make your final payment, you are debt free!You make one payment, and the fixed interest rate should be lower than the fluctuating rates of credit cards.Some banks and a variety of on-line lending sites offer consolidation loans.