Debt Help Programs

How debt consolidation works.

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Debt Help Programs - Debt Management Services Information

how debt consolidation works
Debt help programs: good idea or bad?

Learn how debt help companies work with this debt management services information and get out of debt to stay a stay at home mom.

All you have to do is watch television or get on the web and you'll quickly find that many debt help programs are available today.

With so many consumers in debt, these programs are popping up everywhere.

Of course, before using these programs, it's a good idea to learn some debt management services information.

Getting out of debt is important and as a stay at home mom, it's not just important for your sake, but for the sake of your children too.

While you can find many debt help programs and debt help companies to choose from, debt consolidation is one of the more popular options.

Here is a look at some debt management services information on consolidation and even some information on other programs, how they work, and more.

What is a Debt Consolidation Program?

First, you may be wondering what a debt consolidation program is. This is one of the debt help programs available that involves taking out one loan to pay off other debt.

Instead of working to pay down your debts, all of the debts you have are consolidated into one big debt that you pay on every month.

Often this is done to try to get lower rates or better terms on debt.

It's important to realize that these consolidation programs are different than debt management programs. Debt management programs involve depositing money with an organization that uses the money you deposit to pay on your debt for you. They try to get fees waved, rates lowered, and they negotiate the total debt as well.

How Do They Work?

With being a stay at home mom one piece of debt management services information to know about debt consolidation is how these programs actually work. These programs work by having you take out a debt consolidation loan or a second mortgage/home equity loan to pay off all your debts.

While unsecured consolidation loans may be given, in most cases these loans are secured against your home. When you get this loan, you get the money needed to pay off your other debts. This leaves you with one big payment to pay each month and eliminates your other debts.

Reasons to Avoid a Consolidation Loan or Second Mortgage to Pay Down Debt

If you're considering debt consolidation as one of the debt help programs that may help you, you'll actually find that there are many reasons that you should avoid a consolidation loan or taking out a second mortgage to pay down your debt. Here are several reasons that these types of loans should be avoided:

Reason #1 - Underlying Problem
One of the main reasons to avoid going with a second mortgage or consolidation loan is because taking out these loans and consolidating debt won't get to the bottom of the problem. You won't be breaking all the habits that have led to your deep debt in the first place.

This means that you could end up making the same mistakes again. This would leave you with even more debt and fewer options at your disposal with debt help companies.

Reason #2 - Paying Off Debt Can Take Longer
Usually these consolidation loans used in these debt help programs or debt help companies will end up making it take longer to pay off your debt. They usually have longer terms and if you pay on their terms, you'll take longer to pay and will end up paying more interest on your debt.

Reason #3 - Your Home May Be at Risk
Last, take a look at the debt management services information on these loans. A loan against your home means that your home is at risk if you can't pay. It is never wise to put your home at risk, even when trying to eliminate debt.

Living Paycheck to Paycheck - What are the Best Debt Help Programs?

Of course, some people are living paycheck to paycheck and some of the debt help programs and debt help companies out there may not provide the best option.

Some programs ask you to pay a certain amount every month to get you out of debt.

However, if you're already in the hole, paying out more money will only result in even more problems with debt.

These programs work best for those who do have extra money available. For those living paycheck to paycheck or being a stay at home mom, programs such as the snowball method or simply learning to budget and cut back on spending may be able to provide a better option.

Do These Programs Negatively Affect Your Credit Score?

Before deciding on which debt help programs you want to use, it's a good idea to check some of the debt management services information to find out if the program will negatively affect your credit score. Some programs can affect your score negatively, especially programs that ask you to stop paying on your debt and to start paying money to them so they can negotiate your debt for you.

If you go with a consolidation loan and cancel all your credit cards after consolidating this can have a negative impact on your score as well, since your score takes into account your available credit.

What are the Fees?

Many debt help programs have fees associated with them and you'll find that debt consolidation loans are no different. In order to get these loans, you'll go through a process that will include a variety of fees.

Not only will you be paying interest, but fees can be built into your loan as well, which can make it take longer to pay off this loan. Other programs also charge fees, such as debt management programs. These programs often charge fees based upon the amount of debt they reduce for you.

Avoiding Scams

Unfortunately, there are many companies out there that advertise as debt help programs or debt help companies while actually being nothing more than a scam. With being a stay at home mom when you're deep in debt, you can't afford to lose money to a scam, which means you need to know how to avoid a scam.

First, beware of any promises that look to be good to be true. You also should spend time investigating any company that you want to work with to find out more about their business. Check them out with the Better Business Bureau and ensure there is contact information available. This way you have the debt management services information you need to avoid getting scammed by some of these debt help programs.


Money Saving Resources

Use the following resources to help you on your path towards becoming debt free.

1. More pages on Stay-a-Stay-at-Home-Mom.com:
  • How to Get Out of Debt
  • Financial Freedom: The True American Dream
  • How to Live Debt Free
  • What the Experts Have to Say About Debt
  • Different Types of Debt
  • About Payday Loans
  • Myths About Your Credit Report
  • Consequences of Poor Credit
  • About Bankruptcy
  • 2. Debt Proof Living:
    I found Mary Hunt when I first started to pay off my own debt. Her resources and support were just what I needed at the time, and they might be of benefit to you as well. Check it out: Debt Proof Living



    3. Rayven Recommends these books on Amazon:

    Have you gotten involved with a debt consolidation program? What has been your experience?

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