Bill Consolidation Service

Mr. Drowning in Debt finally called the bill consolidation service that his wife had been talking about for months. This service had been advertised on the man's local television station and it promised that interest rates would be cut, monthly payments cut in half and all it would take is a phone call or a mouse click to make it happen. For Mr. Drowning, the promises sounded like music that was sweeter than a Vivaldi concerto. Across the country and everywhere online a bill consolidation service, also known as a credit counseling service is available. In so many cases, a credit counseling service wears the non-profit moniker, but surprise, non-profits are allowed to make profits also. So Mr. Drowning in Debt made the phone call and scheduled an appointment downtown at a small and inauspicious office which housed one of the non-profit services in the area. Since the office was not extravagantly furnished and the non-profit caveat was firmly in view, Mr. Drowning felt comfortable that this was a place he could trust.

Lest a person get the wrong idea, bill consolidation service can really go two directions. One direction is an actual consolidation of all debts and one new loan takes their place. In most cases the new loan payment is quite a bit less than all the previous monthly bills put together. This approach works...well, not so much. For one thing, the new loan is typically going to be for a very long time, particularly if the consolidated bills added up to a large sum of money. Secondly, the interest on the new loan is going to be gigundo. The reason is because good old steady banks, the purveyors of cheap money, don't do consolidation of debt loans unless it is a home equity loan.

But then if Mr. Drowning had equity in his house, the man would have headed straight for the bank. But his credit is what the kids call whack, and so one new big loan was not what he wanted to do, and bless his heart, he made the right decision. For all the students in the class, here is a question. What do you think happens to an undisciplined borrower of money who gets his payments lowered with the new big bill consolidation service loan and now has some extra spending money every month? Duh. A new loan for that fishing boat will fit quite nicely into the monthly budget. And here we go again.

Whatever interest rates a person has with their credit cards and possibly some installment loans, a consolidation service loan interest rate will probably be at least 21 or 22 percent. And this percentage rate is paired up with a much larger credit amount meaning a ton of cost is associated with a bill consolidation service loan. Don't forget that most lending companies offering these all in one loans are funded by high risk investors who know that those who get this type of lending agreement are probably those who have not had a great track record in handling borrowing privileges. And the higher the risk, the more money a borrower will have to pay for borrowed money. Thus the profit usually outweighs any risk for the investor providing the loan money.

The other direction that bill consolidation service can go is the credit counseling route. Credit counseling may be a bit of a misnomer because credit counseling doesn't really put food on the table. While some credit counseling services do offer classes for the credit challenged, options that the client can do on his own are not readily discussed. Credit counseling is also interested in offering debt consolidation services but with a different twist. The fear of drowning in debt can sometimes almost be palpable but Jesus told us to be much more fearful of something else. "But I forewarn you whom ye shall fear: Fear him which after he hath killed hath power to cast into hell: yea, I say unto you, fear him." (Luke 12:5)

The bill consolidation service that credit counseling services offer is much cheaper than a large debt consolidation loan would be. Thousands of dollars less, in fact. Credit counseling services will negotiate with all of a client's creditors and get every account interest rate lowered substantially with the exception of federal loans and interest on owed taxes. The result will be a substantially lower monthly payment and all accounts can be paid off in five years if the client sticks with the program. Once one account is paid off, more money can be put on the next account and so on. The credit counseling services make about ten percent of the new consolidated monthly payment as their profit. It appears to be a pretty sweet deal.

Danger, danger Will Robinson! Bill consolidation service from a credit counseling service goes on a credit report as negatively as a Chapter 13 bankruptcy. Danger, danger! Statistics say that only thirty percent of credit counseling clients stay with the program until finished! The sad truth is that undisciplined consumers, when they have extra money in their pockets, don't have the will to put the money to wise use, either saving it or putting it on credit accounts for payoff. But there is a huge light at the end of the tunnel for those who want to go ahead and go the credit counseling route. All the things that a credit counseling service will do for the consumer can be done by the consumer himself; just go online and find out!

Add to: File Insurance Business article Teen Photo Images