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What Happens When You Go For Debt Consolidation?

When you go for debt consolidation, you will get an amazing experience. The adviser will go over debt with you and also your expenses. Ultimately, what debt consolidation is about is matching your expenses with your income and paying off your debts. Many people in are in denial about the fact that they just spend too much.

A debt adviser can go through with you, through a computer program, what are your total expenses for the whole entire year. Thats day by day, month by month, etc. People may find out that they really need a second job, or more freelance work to make ends meet, and they have been using credit cards to create the illusion that it was not necessary for them to do that. If you are too undisciplined to get your finances in order, you should contact a debt consolidation agency, also known as credit counseling. Even the FTC (Federal Trade Commission) admits that this is a good idea. Beware, that even if the DBA (Debt Consolidating Agency) is non-profit, after a certain amount of counseling, it is not free, and it may not even be legitimate.

Try to find an agency that offers in-person counseling. Many universities, military bases, credit unions, housing authorities, etc. offer this type of Debt Consolidation service or at least counseling. If your problem comes from too much debt, you may be asked to enroll in a Debt Management Plan. You make one payment to a Debt Consolidation agency a month and they are supposed to negotiate with your creditors, get some fees and penalties waived, and with the once a month payment you give them, pay off credit cards, student loans, etc. These plans could take 4 years or more to complete. The idea is that with a combination of:

1. if possible raising your income, getting free lance work, or a second job.

2. Lower your interest rates, possibly with a home equity loan, but be careful, you dont want to lose your house

3. Have a total outline of what your expenses on a day to day and month to month basis are for the entire year. See what cuts you can make. It makes a difference if you have bag lunches taken to work or you eat out.

Also check with your creditors that they made all the debt concession arrangements that your debt consolidation adviser described to you.