How
Does a Debt Consolidation Program Work?
The way this program works is that a debt
consolidation professional will contact your creditors to get your interest rate and
monthly payments reduced to an amount that you can afford to pay. Many debt consolidators
already have working relationship with these creditors and will know exactly how to get
the best deal for you. For example, if you have a $5,000 debt with MBNA at 21% interest, a
debt consolidator will likely be able to get MBNA to lower your interest rate and monthly
payments significantly.
Typically, a good debt consolidation company can lower your monthly payments by 50%. In
some cases, they can even eliminate interest charges altogether. This way your entire
monthly payment will be toward the principal.
In addition, you no longer pay your creditors directly. All of
your debts are organized into one manageable and reduced payment to the debt consolidation
company. The debt consolidation company in turn pays your creditors on your behalf.
