If you are hopelessly behind in your credit card payments and you see no way out, it can be tempting to sign up with a debt consolidation firm that promises to make everything better. But you need to stand in the truth: signing up with a debt consolidation firm will likely make your financial life even worse.
The Difference Between Debt Consolidation Companies and Debt Management Programs:
DEBT MANAGEMENT PROGRAM - AN ORGANIZATION LIKE CCCS (CONSUMER CREDIT COUNSELING SERVICE):
- Suze - APPROVED
- A non-profit corporation that looks at your financial situation, provides classes to educate you and puts you on a debt management program where you pay them and they pay your creditors.
- The fee is usually $5-$15/month.
- It will not hurt your FICO score.
DEBT CONSOLIDATION COMPANY:
- Suze - DENIED
- Tells you to stop paying your credit cards.
- Affects your FICO score.
- Creditor usually agrees to settle for a fraction of what you owe.
- You will be asked to pay up front, as well as monthly fees and likely even a percentage of the discount they negotiated.
Video: Watch Suze answers Cosby’s debt consolidation question.
Money Lesson: Click here to Find out what money has taught Suze about her own personal power.