The Costs Of Credit Card Help
It seems like there's a new debt consolidation company popping up every other day. To many consumers they are all the same, but in reality they are all very different. Depending on your circumstances, any of your debt help options can prove to beneficial. Of course when one is considering which route to consider, they will want to know what the monthly payment and true costs of enrolling in their type of service. The following is a set of data to consider before choosing debt counseling, debt settlement, or a debt consolidation and a good case and bad case scenario for each option.
Debt Settlement
Total Cost: $16,500
Fees: $4,500
Monthly Payment: $458
Program Length: 3 years
In this scenario, PayingPaul.Com assumes that all of your credit card bills are consolidated and settled for 40 percent of the balance and the company charges a fee of 15% of the balance owed.
Bad Case Scenario:
Total Cost: $42,000
Fees: $6,000
Monthly Payment: $700
Program Length: Never Completed
In this scenario, PayingPaul.Com assumes that none of your creditors are willing to settle and you have to pay the full debt, plus interest and late fees that accumulated on your accounts during the course of the program. It assumes the company charges 20% of the total debt amount and it is non-refundable, although the program didn't work out.
Credit Counseling
Total Cost: $32,139
Fees: $2139
Monthly Payment: $535
Program Length: 5 years
In this scenario, PayingPaul.Com assumes that you consolidated your payments and are able to reduce your interest rates to 0%, and the credit counseling agency charges $39 to get started and then $35 per month thereafter.
Bad Case Scenario:
Total Cost: $50,534
Fees: $2894
Monthly Payment: $794
Program Length: Never Completed
In this scenario, PayingPaul.Com assumes that none of the credit card companies enrolled in your debt management plan are willing to offer concessions, and you are obligated to pay the debt back in full. You miss several payments since they are so high and are therefore kicked out of the program. Worse yet, your debt payments are not even combined or consolidated.
Debt Consolidation Loans
Total Cost: $35,624
Fees: $0
Monthly Payment: $594
Term of Loan: 5 Years
In this scenario, PayingPaul.Com is assuming a 7% interest rate, which is very low for a home equity loan. It is also assumed that the lender will not charge any fees for appraisal, loan origination, etc.
Worst Case:
Total Cost: $51,480
Fees: $1,800
Monthly Payment: $828
Term of Loan: 5 Years But You Never Pay It Off
In this scenario, PayingPaul.Com assumes that the lender charges 6 points for fees and the interest rate is 22 percent. You miss several payments and the lender seizes the property you pledged as collateral.
Want to learn more about your debt consolidation options ? Let PayingPaul.Com match you with a pre-qualified provider. Fill out a form today!