DEBT CONSOLIDATION ADVICE & DEBT SOLUTIONS

Debt Consolidation Solutions - Your Free Online Database For Debt Solutions & Debt Consolidation Advice.


What Type Of Debts Qualify For A
Debt Consolidation Solutions Program?

The general rule of thumb is that only unsecured debt can be included in a Debt
Consolidation Solutions program.
By definition, unsecured debt is any debt that is not tied to a major collateral.
In other words, anything that can be repossessed (Car, Home, Boat, ect.) would not
qualify for any debt consolidation program.
 

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Type of debts that are Acceptable for Debt Consolidation:
  • All Credit Cards (Regular, Store Cards, Gasoline Cards)
    Credit card debt is the most popular type of debt accepted in Debt
    Consolidation
     

  • Any Unsecured (Signature) Loans
    These are primarily personal loans also referred to as signature loans. There is no
    collateral securing this type of loan.
    In some cases the lender may have the applicant submit a list of household goods
    in order to receive such a loan. This is just a scare tactic lenders use to make the
    applicant think that they will come an repossess their furniture, appliances, ect.
    if they default.
    That will not happen
    ! This is not a secured loan and can be included.
     

  • What About a Personal Loan from a Friend or Relative?
    That can be included, but it will be up to the person who lent the money to accept
    or decline the proposal from the consolidation agency.
    With traditional lenders, a reputable consolidation company has agreements in
    place. They should know based on the consumers situation, if a creditor will accept
    their proposal as opposed to a friend or relative that loaned them the money and can
    either accept or decline. It is recommended that the consumer consults the friend of
    family member before submitting to debt consolidation agency.
     

  • Student Loans
    Most government student loans are very low interest. Unfortunately the government
    does not negotiate.
    They will accept a student loan into a consolidation program, but the payment and
    interest will remain the same.
    So why include a student loan?
    For most consumers it's the convenience of one
    monthly payment for all creditors that attracts them to a consolidation program.
    So the advice is to go ahead and include all student loans. But if most of the
    consumers debt consists of only school loans, there are special programs to
    consolidate student loans.
     

  • Closed Utility Bills
    Consumers may include any utility bill (gas, electric, phone, cable ect.) only if the
    account is closed and they are not using the service of that utility company.
    Usually these type of accounts are from previous residences.
     

  • Collection Accounts
    Any account that is in collections can be consolidated. There is usually no
    exception to the rule.
     

  • All Repossession Accounts
    If a consumer owes a balance on any account that was defaulted on and the
    collateral (car, property, boat, ect.) was repossessed, the collateral no longer
    exists and the debt can be consolidated.
     

  • Medical Bills
    All medical bills can be consolidated.
     

  • Any Other Unsecured Debt With No Collateral
    If you are unsure if a certain debt qualifies, ask your consultant or contact us with
    the question.

There are a few other things consumers should be aware of when applying for debt
consolidation.
Unlike bankruptcy, consumers may choose the accounts that they want to consolidate
and the accounts that they want to keep out of the program. In other words, you don't
have to consolidate every debt you have.

The reason it's important to know this is because the creditors require that all revolving
accounts (like credits cards) to be closed when accepted into a debt consolidation program.
This only makes sense since the goal of Debt Consolidation is to eliminate debt, and the
first step in achieving this goal is to stop charging.

A few things to know about American Express, Credit Unions and Checking Accounts:

  • American Express
    If a consumer has an American Express credit card, it's advised to include it in a
    consolidation program. The reason is that American Express is the only creditor
    that conducts regular credit checks on all their clients. If an account is excluded,
    American Express will eventually find out that the consumer in a consolidation
    program and take away their charging privileges.
    On the other hand, if a consumer completes the program without late payments,
    American Express will eliminate their interest.
     

  • Credit Unions
    If a consumer has a loan or credit card with any Credit Union, they may want to
    consider keeping them out of Debt Consolidation. Most Credit Unions are a privilege
    and carry a much lower interest rate than other creditors. Many consumers
    that use Credit Unions have additional accounts with them such as Insurance
    Policies or Checking Accounts. If they consolidate a credit card or loan from a Credit
    Union, they may lose all other accounts or policies associated with that lender.
     

  • Checking Accounts
    If a consumer has a credit card and checking account with one bank, their credit
    card may be used as overdraft protection for the checking account. In a case as
    such, they should close out the checking account and reopen with a different bank.
    Otherwise when the credit card is accepted into a consolidation program, they may
    loose the checking account.

     

Type of debts that are Not Acceptable for Debt Consolidation:

  • Garnishments
    Usually associated with child support, this is when the employer garnishes a
    part of the wage as ordered by the Courts.
     

  • Child Support
    No one can change the outcome of a Court Order.
     

  • All Judgments and Court Orders
     

  • Payday Loans or Advances (unless in collections
     

  • Rent To Own
    Usually pertains to furniture and appliances that are rented with the option
    of owning.
     

  • Time Shares
    Just like any real estate, this is a secured debt.
     

  • Current (Open) Utility and Phone Bills
    Consumers may only include utility bills (gas, electric, phone, cable ect.)
    if that account is closed and they are no longer using the service of that utility
    company.
     

  • Any Type of Tax or IRS Debt
     

  • Traffic Fines
    Court ordered, no exceptions.
     

  • Business Accounts
    Consumers may not include any account that solely a business
    (not the individual) is responsible for.
     

  • Any Secured Debt Tied To A Major Collateral
    In other words, anything that can be repossessed (Car, Home, Boat, ect.)
    would not qualify for any debt consolidation program.
     

If you are unsure if a certain debt qualifies, you may ask your consultant or contact us
with the question.
 

Some Do's and Don'ts

  • Do make sure that you close all revolving charge accounts yourself when
    entering into a consolidation program.
    See
    How does Debt Consolidation work? for more details.

  • Do not charge up your credit cards before applying for debt consolidation.

  • Do not make balance transfers before applying for debt consolidation.
     

A note from the author;

These Debt Consolidation laws are created and governed by the creditors. Only the
creditors may change them. If a Debt Consolidation agency ever tries to convince a
consumer of anything other than what is outlined in this report, they are not the
type of agency that a consumer should get involved with. Detailed information about
choosing the right agency to consolidate debt can be found here.

Victoria Egnatova
Senior Financial Consultant


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