Consumer Protection Law

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My question has to do with credit. My credit scores are low…

My question has to do...
My question has to do with credit. My credit scores are low due to a major income drop/lost. As a result I am considering using a consolidation company to assist me. Can you tell me how effective they are? For some of my credit cards it appears I will never pay them off. However if the loan is charged off the amount and interest freezes. Is that correct? Any recommendation appreciated.
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Answered in 7 hours by:
1/14/2018
KLAW
KLAW, Lawyer
Category: Consumer Protection Law
Satisfied Customers: 2,209
Experience: I have over 20 years of experience in commercial real estate law, finance, consumer credit, landlord tenant, and business law.
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Good morning. Debt consolidation management plans are plans are offered through credit counseling agencies and, much to many people’s surprise, they don’t actually really consolidate your debt.Instead, you make a “consolidated” payment to the counseling agency, which then pays each of your creditors—usually at a reduced interest rate.Even though you’re making only one or two monthly payments, the counseling agency doesn’t actually pay off your creditors for you—it simply acts as a middle man to help you repay your debts and ensure that the creditors get the money they’re owed.These programs are available regardless of credit scores, it is effective if you don’t use credit.There is also what is called consolidation.
This is getting a new loan to pay off other debts is the most popular way to consolidate. It’s certainly what most people think of when they consider consolidation. But finding a loan that has decent terms and is designed specifically for the purpose of consolidation can be challenging—especially if your credit scores are a bit lower due to the balances you’re carrying.Keep in mind that Consolidating credit cards with high balances using an installment loan (i.e. a loan with fixed monthly payments) may actually benefit your credit rating, especially if you use the loan to pay off credit cards that are near their limits. At the same time, any new loan can cause a short-term dip in your credit scores—so don’t be too surprised if you see your credit score change slightly when taking out a new loan, for a short period.Those are the options available. Debt consolidation management companies however usually cause your credit score to drop and if the loan is written off, then your score drops. The benefits are that the loan amount does not increase due to interest, and fees and you can pay off the loan quicker.
I hope this clarifies. Please don’t forget to rate the question. We as attorneys are not employees of Just Answer and are not paid unless you rate the question with stars
KLAW
KLAW, Lawyer
Category: Consumer Protection Law
Satisfied Customers: 2,209
Experience: I have over 20 years of experience in commercial real estate law, finance, consumer credit, landlord tenant, and business law.
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KLAW
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KLAW, Lawyer
Category: Consumer Protection Law
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Experience: I have over 20 years of experience in commercial real estate law, finance, consumer credit, landlord tenant, and business law.

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