There are not too many pros of debt consolidation programs, but the cons include a blemish on one's credit rating. Find out how debt consolidation programs can give a person a lower interest rate with help from the owner of a debt negotiation company in this free video on debt and money management.
Hi, my name is Peter Repak, the owner of Clear Financial, LLC, a debt negotiation company. What are the pros and cons of debt consolidation programs? Well, there's not too many pros, but lots of cons. Well, what do I mean by debt? You could consolidate your debt into a one lump sum payment, but all that's going to accomplish, they're going to have one single payment, but your credit score will be flagged because now you've demonstrated that you're unable to pay off your debt. So what happens then, the lender really doesn't want to give you any money. Now, why there are so many cons, why there is so many problems with this? Because the whole entire thing, how it was set up, was the problem. Why? During the 1960's consolidation agencies were set up by the banks themselves. These nonprofit agencies are actually owned by the banks themselves. What they do is they tell you that you're going to be out of debt within four years when in fact it takes about eight to twelve years to get out of debt. In my practice about 30% of my clientele is coming off of those programs. So as far as a debt consolidation program, it's really not a good thing to do because it's not really going to get you out of debt. All it's going to accomplish is it's going to lower your interest rate a little bit on what you currently have. You can accomplish that simply by calling the credit card companies and try to negotiate on your own your interest rates. However, credit card companies don't want to negotiate anything on your debt whatsoever. As a matter of fact even if you give them a call that you want to lower your interest rate that gives them a red flag that you have trouble. Before you do anything you need to find out exactly what your options are. You can give us a call like a company like mine, and really find out how these things work, what they are doing. But as far as a debt consolidation program, I don't know any of them which is actually would help you for real. Sometimes, in rare occasions, it does, maybe once in a blue moon it's a good idea, other than that I wouldn't do it, I wouldn't recommend it. My name is Peter Repak, I'm the owner of Clear Financial, LLC, a debt negotiation company, thank you for watching.