| Wrong Type of Debt Consolidation (debt consolidation)
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Wrong Type of Debt Consolidation
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Advice on Bill Consolidation
Bill consolidation is an effective technique applied to improve the credit rating of a borrower. It is the process of combining all outstanding debts in the form of loans, medical bills, and installment loans, into a single mortgage account. It minimizes interest payments and removes penalties and late fees. Today, numerous bill debt consolidation programs and companies provide professional bill c... Read debt consolidation article
Consolidate Credit Card Debts
Many of us have fallen into the trap of overindulging on our credit cards. And who can blame us? We waltz through the department stores and they constantly tempt us with their seemingly never ending sales. Clearance sales, Winter sales, January sales, it goes on and on. The credit card companies rub their hands together with glee as we rack up higher and higher credit card debt at exorbitant inter... Read debt consolidation article
Wrong Type of Debt Consolidation
"It's very easy sir, we can help with debt consolidation in a number of ways. Let us know exactly how much you owe, who the debts are to and for a fixed fee we take care of all of the rest. Your credit record will start to be rectified the moment you put down this telephone. Can you afford such and such (figure withheld)? It will come out of you account on a regular monthly.....oh and by the way, should there ever be an occasion that you have a problem with the monthly payment, call our Customer Service Hotline where we will be only too happy to advise you what happens next."
"Debt Consolidation". Wow what a great phrase. Great, wonderful, fantastic, all my financial problems solved in one easy telephone call. Now I can look forward to the Postman arriving without dreading the contents of the next envelope!
Or can I?
The above scenario is played out across countless homes in countless cities where the promise of an easy fix to a nightmare situation is actually quite an easy sell.
Well why wouldn't it be?
After all, on the one side you have the witless and shell shocked debtor who is scared out of their mind that he (or in a growing number of cases she) is about to lose their livelihood, home and everything. On the other a smooth, fast talking telesales rep that is now promising to deliver what had hitherto seemed like the Holy Grail.
Except for the fact that in a growing number of cases these so called, Credit Repair Debt Consolidations are actually doing more harm than good.
First of all sadly there is no such thing as a free lunch - or in this case a deeply consolidated and discounted one. Everything has it's price and in these cases the price is usually hidden in the small extremely fine print that was alluded to in the telephone call as the subject that would be dealt by the "happy ever present, effervescent, Customer Service Rep".
This, my formerly scared and now ensnared friend is where the fun really starts.
Imagine the following scenario; things have gone well in the first few months; payments made on the button but suddenly for whatever reason the well has gone dry. Now this could be for a number of reasons, after all a leading charity for the Homeless has gone on record as saying that basically we are all "within a few missed pay checks of being made homeless" but in your case that's it, no cash to make this months payments.
Suddenly the "effervescent, Customer Service Rep" is now cheerfully informing you that as per the terms and conditions of your agreement, there will now be a late payment, penalty charge levied that before you know it has now meant that it has to be cleared before you can resume your instalments and now before you know it you are now sliding further and further into debt again. Finally if these are not met then the whole arrangement is now null and void, your creditors (who probably have still not received a penny) notified and that in all due circumstances Bankruptcy proceeding will follow against you.
Bang, hello reality, welcome to the real world again.
Now I know that the above scenario may seem an extreme case (though sadly not too far fetched) but it is very much a case of "buyer beware" when it comes to Debt Consolidation and Credit Repair. My own personal preference if you wish to go down the road of Voluntary Bankruptcy or IVA route is always to go to the "glassy eyed monster" type of Insolvency Practitioner who give you a real hard time before taking your case before the Bankruptcy courts and being appointed your Insolvency Supervisor. After all, if they scare you, imagine what they will do to your creditors!
And the real bonus? They're on your side and if you keep in close contact with the communication channels open then they will always try and be as flexible as possible and look after your interests as well as that of your creditors. After all it is their interests as well as yours to reach a successful and happy conclusion.
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Debt Consolidation Programme
OK having accepted that although it is not a totally dominant practice, we have to accept that for a large number of debt collectors, harassment is a large and major part of their arsenal i.e. the weapons at their disposal.
Sadly, this is a very short sighted policy that actually causes then and their clients more harm than it does them good but I guess they will only learn the error of their ways when they look back over time and realise what a stupid course of action it all was.
At this point it might be an idea to try and get into the mindset of "the harasser" rather than that of "the harassed" and as such try and get a greater understanding of why they do "the things they do".
Top of the list behind all of this is a small four letter word called "fear". They have this over riding concern that they might actually not be the only creditor involved in the process of debt collection and as such to do the best for their clients it is a case of "every man for himself".
This leads them to believe that before not too long the list and approach of creditors in most of their cases is going to resemble a "herd of migrating wildebeest rampaging across the Serengeti national park" that they feel duty bound to get in first and try and force a result as quickly as possible.
Loud, confident and very very wrong in most cases but why should I bother to try and re-educate them? They are going to have to learn this for themselves. The concept of damage limitation i.e. lets get as much as we can before the entire pack of cards comes tumbling down is a very powerful and motivating force that it is very difficult to ignore. "The more we get now by "hook or by crook" meaning the "less we have to lose at the tail end" leads to an entire process driven by short term thinking that actually does more harm than good.
This does more to drive the debtor into the arms of the Court or the Insolvency Practitioners with the end consequence being either Bankruptcy or a composition of creditors / IVA (Individual Voluntary Arrangement), both results leaving the creditors with only a percentage in the pound as the value of their actions as opposed to a much larger amount if they followed a more reasonable course of action.
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Wrong Type of Debt Consolidation
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