Consolidating loans good or bad
With a debt management plan, you make one payment to the credit counseling agency, which distributes the money to your creditors until they are paid in full.
Even if they are members of such organizations, though, be picky. So while the agencies and employees vary, the plans are all structured the same way: Your counselor determines how much it will take to pay your creditors in full in three to five years.
If most of your liabilities include other types (tax debt, unpaid child support or old parking tickets, for instance), these plans won't help.
Second, you should be confident that you can pay not just for a month or two, but for years.
However, it is very important to look at the terms of your new consolidated loan to make sure that you are really getting a good deal.
There are many companies looking to take advantage of people struggling with their student loans.
If you have enough cash left over after subtracting expenses from income, consolidation will be presented along with other options. How do you know if a debt management plan will work in your favor?
When a counselor is knowledgeable and compassionate, these sessions can be enlightening and motivating. If he or she acts bored, judgmental or pushy, request a different counselor. First, the bulk of your balances should be in unsecured debts, such as credit and charge cards, personal loans and, sometimes, collection accounts.
Pay more to the accounts with the highest interest rate, and when one is paid off, add the payment the next most expensive debt.
Finally, commit to living within your means and prepare for life's inevitable financial emergencies.