What is Debt Consolidation?
Definition: Debt Consolidation
Debt Consolidation is the act of bundling all of your separate debts into one large debt. This is most often accomplished by hiring a third party (the debt consolidation company) to pay your bills for you. This implies that you are unable to successfully manage your own debt and, even after the debt has been fully paid, will be reflected as TPA (Third Party Assistance) on your credit report, which is NOT a good thing for your credit rating.
You're Still Responsible with Debt Consolidation
Debt Management Plans (DMP) a.k.a. Debt Consolidation, are not for people with serious debt trouble. DMP's consolidate your debt and take over the payments you would normally make. Remember although, that you are the one responsible to the creditor for timely payments. If your debt management consolidation company sends your payment late, you will be liable for the late fees and the resulting hike in interest rate.
Oprah Winfrey's Debt Help Show
Debt Consolidation and Debt Settlement have both seen a huge increase in popularity since Oprah Winfrey featured a debt consolidation guru on her talk show. Debt consolidation although, does not take into account the possibility that much of a persons existing debt may be interest that has accumulated for years, well after the principal of has been paid in full. Debt consolidation requires that all existing debt be paid in full without regard to interest accrued and/or already paid.
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