Smart ways to merge your Credit Card Bills through Debt Consolidation Program

April 4, 2011

Author: William M. Davis

Americans are famous for carrying multiple credit cards but their reckless way of spending often pave the path for debts. In order to manage their mixed interest rate on each payment on different credit cards they plan to opt for a debt consolidation program. You can combine all your unsecured debts under a single low interest consolidation loan and make it affordable for you to pay off.

A debt consolidation company helps to negotiate with the creditor on your behalf and reduce the principal amount to make it reasonable for you to pay off. They manage to reduce your debts up to 50% to 70 % of the total amount you owe. The company also negotiates regarding the duration of the repayment plan with the creditor and extends the deadline.

This is a convenient way for the debtor to pay off less than he actually owe to the creditors. It is beneficial when you have high interest credit card debts merged under a low interest consolidation loan. In this way a debtor saves a large amount as paying the bills on time prevents the high interest accruing on the principal balance and making it affordable to pay off. And the debt stricken consumers who opt for a consolidation program often save a considerable amount at the end of the program.

With the rising popularity of the consolidation program, the government has implemented a new law that safeguards the interest of the consumers. This law helps to put an end to the mushrooming growth of the scam consolidation companies. This new set of laws ensures that the debtors can take the benefit of this program to regain financial independence.

According to the new rule enforced by the Federal Trade commission, the debt consolidation companies are prohibited from taking up front fee. The company has to settle a fraction of the borrower’s debt and then it can levy a service charge to its clients.

Debt consolidation is considered to be the safest and fastest way to eradicate your obligations. And this new law ensures it to make it the safest mean to a successful debt free life.

Debt consolidation program is a viable alternative to bankruptcy. Your credit report is blemished for 7 to 10 years if you file bankruptcy but the impact is not severe in the case of debt consolidation. You can consult a debt relief expert and get a free consultation who can offer you various ways to repair your credit rating after the end of the debt relief program.