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Finding Debt Agencies That Really Work
Michalis 'BIG Mike' Kotzakolios

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From time to time, people find themselves with a great deal of debt on their hands, and limited resources to repay the debts. To that end, there are a number of debt agencies around today that claim to be able to help. But do they work? Here are some thoughts on debt agencies and what they accomplish.

Many debt agencies make rather grand claims about saving the consumer a large amount of money each month, by working with creditors to lower monthly payments. The consumer sends one monthly payment to the debt agency, which then disburses the payments to the creditors. On the front end, this seems like a great arrangement. However, what usually happens is creditors usually freeze the account, applying no more interest, but also classifying the account as being in arrears until it is paid off. This can adversely impact the credit rating.

Next, while many debt agencies are perfectly legitimate, others are out to make a buck and may not even work all that hard to bring your creditors into the fold. Watch for debt agencies that want a large payment up front for their services. Many programs instead include a modest processing fee in the monthly payment the consumer makes to the agency.

Last, beware of debt agencies that do not provide much in the way of consumer debt counseling. There are a number of agencies around who offer classes and other resources such as budget planning to help people get out of debt. Their focus is on helping people to develop practical and positive spending habits that will keep them from getting into the same financial mess a second time. Check in your community for an agency that provides these types of services, and you likely will find a debt agency that is really worth investigating.

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