There are a lot of conflicting stories, confusing articles, and talk about debt consolidation lenders. We will attempt here to clear up a bit of that confusion. Not all debt consolidation lenders are the same. Some of these companies are there to help you out, while others can hinder your debt management.
Debt consolidation lenders are in business to help you find the right debt solution. The company that is best for you is the one that listens. A good lender will begin by gaining some information from you. They will ask you to fill out paperwork listing your debts. Any mortgage, credit cards, car loan, or line of credit will need to be listed. You will also be asked on average how much you spend on utilities, eating out, groceries, incidental charges, etc. From there the debt consolidation lenders can help you determine which lines of credit need to be paid off and how this might occur.
The aim of the debt consolidation lenders is partly to sell you a loan. This is how they make their income from you. Good companies will not sell you a loan if you do not need it. Instead they may charge you a fee for their services. This fee is for the debt consolidation lenders to approach your various creditors for a solution. They may get your debt reduced in what is called a payoff amount. If you can pay the creditor $2000 on a $3000 loan they may forgive the $1000 in order to get a little money from you.
Keep in mind that no creditor wants you to file for bankruptcy. If you file for bankruptcy they see none of the money they are owed. The debt consolidation lenders work with the creditors as a mediator so you do not have to try and work out a deal. In the end if a loan is the best way for you to pay off your debts you need to look at the interest rates and payment. You have the ultimate decision in signing for the loan or seeking a new solution.