Debt Consolidation Plans | Finance Monster

Credit card debt can get a person into a ton of trouble. They will find that the more debt that they have that it becomes almost impossible to get out from under. It is no wonder that more and more people are struggling to get rid of their credit card debts. Credit cards pull people in with low introductory rates and the idea of these seems to get people believing that they can control their spending. But, with such interesting cards, it is hard for the person not to think that they can pay it off later. Then, they enter into the phase in which they are using the card and making the minimum payments, really never getting out from under the debt that they have. A debt consolidation plan is a bit different from a debt reduction plan that the person can choose from. With a debt consolidation plan, all the debt that the person has is consolidated into one lump sum. With the help of companies that specify in this type of consolidation, the person will find that they can get a lump sum payment that is lower than the overall debt that they have.

With this type of plan the sum that the person pays is usually fifty percent less than what they would pay if they were to keep paying on these credit cards on their own. The company will give the person a certain amount of time in which they are supposed to compile their funds in order to get the payment that the creditors and the company have agreed to. For some people this time limit can be a year or less. During this time, they put the money into a different account that the company has opened for them. Meanwhile, the company argues with the creditors for a lump sum payoff for the credit card. This is different from unemployed debtors with savings.

Once the person has reached the limit that has been specified, the company will disperse these funds to the credit card company that needs them. They will find that after this occurs that they are completely debt free. They cannot use the credit cards any longer as the companies have canceled these cards, which is common practice for anyone entering into a debt consolidation plan. However, it can help the person to get out from the debt and start their life over.

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