Avoiding Financial Disaster

• Living above your means, an unforeseen emergency and a bad economy are just some of the ingredients in a recipe for a financial disaster. Some consumers fold under this kind of pressure and choose bankruptcy as a way of avoiding the calamity. However, bankruptcy is not always the best, or the only, solution. Finding a reputable debt consolidation service may be the more viable solution.
  
  

What Is Debt Consolidation?

• A debt consolidation service, pretty much, is self-explanatory. The service combines all of the debt a consumer has acquired into a single affordable monthly payment. The logic behind a debt consolidation service is to provide a consumer with the financial breathing room for paying bills. Usually, the new monthly payment arranged by the debt consolidation service will have an interest rate that is lower than what the consumer previously paid. In some cases, a debt consolidation service will have the debt a consumer owes decreased.
  
  

How It Works

• A reputable debt consolidation service will have seasoned relationships with lenders. The service will use its relationships with lenders -- on the client's behalf -- to negotiate a lower interest rate and a lower payment.
  
  

Warning

• When a consumer is drowning in debt, he will be more apt to reach for the first financial rope back to safety. However, if the debt consolidation service sounds to good to be true, most likely it is. An unscrupulous debt consolidation service knows a consumer is vulnerable when he cannot pay his bills; this provides the window of opportunity needed for the scammer to make empty promises or charge for services it cannot deliver.
  
  There are a few things to look for when choosing, or inquiring, about a debt consolidation service.If a debt consolidation service approves you for service without having you provide proof of your debt, consider that to be your first red flag. A legitimate debt consolidation service needs proof that you are actually in debt. In addition, a real service requires a client to have a certain amount of debt before taking his case. Another red flag is if you are required to pay all of the cost associated with the debt consolidation service upfront. It is true that some debt consolidation services charge a fee; however, you should not be expected to pay that immediately.