However, not all may be as beneficial or as reliable as debt consolidation.
One type requires you to apply for and receive a consolidation loan to replace all past debts and bills.
Your past creditors will be paid and you will now owe a monthly payment to repay your new balance with the consolidation company who supplied your loan.
The debt management company will then pay all creditors listed on the account.
In simple terms, a client will be consolidating multiple payments to creditors into one low monthly payment to be disbursed to creditors through this service. CCA Debt Management Consolidation loans offer a quick fix solution and temporary relief by replacing multiple debts with one new loan.
Prior to beginning repayment, a credit counseling agency (CCA) will negotiate with creditors to reduce interest rates and settle on manageable monthly payments.
Once these are set, all payments are totaled and this amount is withdrawn from a client’s personal bank account as one single monthly payment.
Once an account has been paid in full, it is important to reassign its payment to the next account with high priority.
This aggressive approach is proven to be successful.
There’s no guarantee of approval or that if approved, the amount will be large enough to cover all outstanding balances the client possesses.