This is perhaps the fairy godmother fantasy. A Nice Big Debt Consolidation Company appears and claims they will turn your life so much comfortable. The consolidators will negotiate lower interest rates, slash your monthly payments — and the only thing you need to do is make “one easy payment.”

Actually, many debt consolidators incorporate a fee as part of the payment you give to them each month. It is normally about 10% of the payment that becomes $50 on a $500 monthly payment. They forward your payments to the creditor — some debit right from your checking account — and win back a 10% — 15% relaxation that the relieved creditor is just too satisfied to give a reduction to the consolidator.

Is it right to pay somebody else to do what you can do yourself, that is negotiate lower interest rates and extend repayment schedule and put the highest-interest debts on priority?

To long-desperate ears, this will sound like a perfect solution, particularly when you discuss with such people and they scare the hell out of you. I had meeting with two, Cambridge Credit and Counseling Services and Integrated Credit Solutions. Both rendered same services, and I do not recommend any of them. The senior credit counselor I talked to at Integrated said, in grave tones, that it would require me 392 months — or 33 years — to pay off my debt. With their expertise services, however, they could “save me 26 years,” and I would be able to pay off my debt in just 77 months, or about 6-1/2 years.

That was funny, because when I put my debt into the a debt consolidation calculator, It tell me that I can pay off my debt in 43 months, providing I make a bit higher minimum payments to each card: a total of only 60USD additional per card.

There is one major risk with consolidators you should be aware of: they generally, in many cases, make late payments and even miss also, hence aggravating your plight (and your credit history).

After getting off the phone with Integrated, I asked my own self: Is it right decision to pay anybody else to do what I can do on my own? i.e., negotiate lower interest rates and extend repayment schedule and pay off the highest-interest debts before anything else? I don’t believe so.

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