Being only 1 day late on paying a minimum balance on your credit cards is a biggie. Also, the more credit cards you own, the larger potential for debt...so CANCEL the ones you don`t use or need....don`t just throw them out.

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I have a friend that is currently unemployed and in debt approximately 73k. he is receiving a profit on a preconstruction condo unit of 50k. (his first owned property so no tax is required to be paid in ontario, canada) as he explains it to me, he has 24k in credit cards(19-23%), 8k in lines of credit (8%), 18k owed to close friends for floating him, 4k in overdraft at the bank, and 18k in student loans. he would also like to store 5k to support himself until he can find work. he wants to know if he went to a debt consolidation company, would they be able to reduce the total amount on credit cards/lines of credit/overdraft to an amount where he can pay off the friends and total reduced debt? what does it typically cost? (i told him approximately 2% of total debt.) his credit score is approximately 620 (so not great). what type of impact would it have on his credit? he asked me if it would be worth it. i don't know what to tell him. any help would be appreciated. thanks!

Since there are a variety of debt resolution options, including credit counseling, debt negotiation/debt settlement, a debt consolidation loan, bankruptcy, and other debt resolution options, it is important to fully understand each option and then pick the solution that is right for you. Credit Counseling Credit counseling, or signing up for a debt management plan, is a very common form of debt consolidation. There are many companies offering credit counseling, which is essentially a way to make one payment directly to the credit counseling agency, which then distributes that payment to your creditors. Most times, a credit counseling agency will be able to lower your monthly payments by getting interest rate concessions from your lenders or creditors. Because the program lowers interest rates, it less effective for someone whose interest rates are already low. It is important to understand that in a credit counseling program, you are still repaying 100% of your debts -- but with lower monthly payments. On average, most credit counseling programs take around five years. While most credit counseling programs do not impact your FICO score, being enrolled in a credit counseling debt management plan does show up on your credit report, and, unfortunately, many lenders look at enrollment in credit counseling akin to filing for Chapter 13 Bankruptcy -- or using a third party to re-organize your debts. Debt Settlement Debt settlement, also called debt negotiation, is a form of debt consolidation that cuts your total debt, sometimes over 50%, with lower monthly payments. Debt settlement programs are geared for people who have a financial hardship that makes it so they either cannot pay their bills or are about to start falling behind. Debt Settlement programs typically run around three years. It is important to keep in mind, however, that during the life of your debt settlement program, you are not paying your creditors. This means that a debt settlement solution of debt consolidation will negatively impact your credit rating. Your credit rating will not be good, at a minimum, for the term of your debt settlement program. However, debt settlement is usually the fastest and cheapest way to debt freedom, with a low monthly payment, while avoiding Chapter 7 Bankruptcy. The trade-off here is a negative credit rating versus saving money. Debt Consolidation Loan Many people think first of a debt consolidation loan when seeking debt consolidation. This option typically means a second home loan (or home equity line of credit) or refinancing your primary mortgage. In a debt consolidation loan, you exchange one loan for another. The most frequent form is taking out a mortgage loan, which carries a lower interest rate and is tax deductible, to pay off high interest rate credit card debt. It is important to be aware that shifting unsecured debt to secured debt can create a volatile situation, if there is ever a chance that you cannot afford the new mortgage payment you are now putting yourself at risk of foreclosure! In the case of a debt consolidation loan, most mortgages are 30-year loan, which means that the total cost and the time to debt freedom could be very high, but the monthly payment will be lower than other options and there is no credit rating impact. I hope this information helps you Find. Learn & Save. Best, Bill http://www.bills.com/blog/