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Debt consolidating counseling

If a debt consolidation loan can help you get control of your finances before you have begun to miss payments, you may be able to avoid or minimize damage to your credit rating. Look out for the usual red flags, like extravagant promises that your debts will be forgiven and that you can get out from under a mountain of debt with very low payments.

Bill consolidation is the process of combining multiple credit accounts into one loan.

It provides the convenience of requiring just one monthly payment of the borrower.

Be suspicious if the company offers low interest, easy credit, guaranteed-to-qualify loans, especially if you have a poor credit history.

Also remember that no lender can charge you a fee in advance of funding a loan.

Ideally, this new account or loan will have a lower interest rate than the accounts had previously.

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Make sure you find out who is responsible for saving your money in the program - some require you to send monthly payments to the company or to a third party, while others require you to simply open your own bank account.And even if you save significant amounts in the program you may owe income taxes on the amount of "forgiven" debt.

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Before signing up, ask how long your repayment plan will be so you know exactly when you are expected to be debt free.Debt settlement companies often do not have lawyers available to assist you in those situations.You will also likely have to pay high fees to participate in the program - find out what your total costs are and who is receiving your money.And, some forms of consolidation are extremely risky.For instance, if you can’t make your payments on a home equity loan, you may lose your house.It is in your best interest to pay down your debts as quickly as possible.