Do debt consolidation companies really work?
On One Hand: The Theory Is GoodDebt consolidation companies can work. The theory is that by knocking the interest rate down and lumping all the old debts together, the extra money saved from a lower monthly payment results in breathing room that helps a person from sinking further in debt.On the Other: Almost Never WorksOften the monthly payment is lower because the payments are spread over a longer time line. This means you will pay more to the debt consolidation company in the long run than if you just paid of the debt.
There are a few debt consolidation companies who really help people consolidating debts. As they have financial experts who suggest debt consolidation plan after analyzing your debt problem in depth. They reduce your monthly payments through negotiations with the creditors by either eliminating late fees and penalties or lowering total debts. All this can also be done by self but then it requires a lot of time, research like contacting creditors, negotiating with them, totaling your debts, assigning priorities to expenses, making a plan etc. Sometimes when the debt amount is lower it can be manageable but when its huge it seems unmanageable and then you may need help of such a company. Hence it ultimately depends upon an individual.
