Debt Consolidation, Debt Negotiation, and the FTC

28 Dec Debt Consolidation, Debt Negotiation, and the FTC

Debt consolidation is taking on a new debt to pay off old ones. Debt negotiation is hoping to reduce a debt. Both are hugely expensive, generally unhelpful, and not recommended.

The Federal Trade Commission says that debt consolidation loans “require you to put up your home as collateral. If you can’t make the payments or if your payments are late you could lose your home. What’s more, the costs of consolidation loans can add up. In addition to interest on the loans, you may have to pay points, with one point equal to one percent of the amount you borrow.”

About debt negotiation programs, the FTC says that they “can be very risky, and have a long term negative impact on your credit report and, in turn, your ability to get credit.”

Bankruptcy may actually be your best choice.

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L. Jed Berliner practices exclusively in consumer bankruptcy, foreclosure defense, and related consumer protection litigation such as credit card defenses and suing debt collectors. He established his Springfield, MA practice in 1988. Attorney Berliner is a regular and active contributor to the Bankruptcy Law Network, the Bankruptcy Roundtable, and the National Association of Consumer Bankruptcy Attorneys, three specialized consumer bankruptcy forums on the Internet, and is an informal mentor to regional practitioners. He is recognized by his peers as an expert in consumer bankruptcy issues. He thoroughly enjoys being rated "excellent" in his client surveys.

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