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Debt Agencies
From time to time, people find themselves with a great deal of debt
on their hands, and limited resources to repay the debts. To that
end, there are a number of debt agencies around today that claim to
be able to help. But do they work? Here are some thoughts on debt
agencies and what they accomplish.
Many debt agencies make rather grand claims about saving the
consumer a large amount of money each month, by working with
creditors to lower monthly payments. The consumer sends one monthly
payment to the debt agency, which then disburses the payments to the
creditors. On the front end, this seems like a great arrangement.
However, what usually happens is creditors usually freeze the
account, applying no more interest, but also classifying the account
as being in arrears until it is paid off. This can adversely impact
the credit rating.
Next, while many debt agencies are perfectly legitimate, others are
out to make a buck and may not even work all that hard to bring your
creditors into the fold. Watch for debt agencies that want a large
payment up front for their services. Many programs instead include a
modest processing fee in the monthly payment the consumer makes to
the agency.
Last, beware of debt agencies that do not provide much in the way of
consumer debt counseling. There are a number of agencies around who
offer classes and other resources such as budget planning to help
people get out of debt. Their focus is on helping people to develop
practical and positive spending habits that will keep them from
getting into the same financial mess a second time. Check in your
community for an agency that provides these types of services, and
you likely will find a debt agency that is really worth
investigating.
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