Non-Homeowner Debt Consolidation: What To Expect

But if you are not a homeowner, what are your options? Do you have any relief that you can look forward to?

Debt consolidation can be done by more than one method. One way is to use the services of professional negotiaters. These are the people that work at credit counseling centers (for profit and non-profit alike). What they do is contact your creditors and negotiate new terms on interest rates and balances. In return for this service they add a small monthly fee onto your payments.

Your creditors have a lot to gain from negotiating the terms of your debt in this way. In short, they know that this is their best chance of getting steady payments from you. In recognition of that, a debt reduction of up to 60% is often possible. However, be aware that if your creditor has already turned your account over to collections, the credit counseling center will probably not touch it.

Here's how it works

The whole process is somewhat of an art rather than a science. The first thing that happens is that a agent will be assigned to your case. She will gather all the information available about your credit, your outstanding debts, your income, your assets, etc. Then, with that information, she will design a plan. Next, she'll contact your creditors and begin negotiating with them. As a professional, she'll have a pretty good idea of what the creditors will accept...and reject. Since your creditors want to get paid, they’ll agree to more flexible terms on interest rates, monthly minimums and term of payments.

Depending on the company you have engaged, a second option might be available: a loan. This loan will be used to repay the newly negotiated debt. In return, you’ll end up with a single monthly payment.

The downside

Once the fact that you’ve got into a program is reported, your credit history will reflect this and your ability to get finance will be considerably diminished. In other words, using the services of a agency can drive down your credit score.

However, if your current loan debts, credit card balances and other debts have become a nightmare, then a program might be your best chance to avoid bankruptcy.

Conclusion

If you are in financial trouble and you are not a homeowner, you do have some options. In short, you can engage the services of a professional negotiator to secure better terms for the retirement of your debt. However it is important to know that there are pros and cons to this kind of solution.