Debt Review
The first part of getting a qualified debt consolidation program started is to you're your debt and debt situation reviewed by a professional who works for a debt management company. This consultant will review all of your bills, your income, and your credit history to see how well you have been managing thus far before recommending a course of action blindly. You are always free to accept or reject the counselor's recommendation once it has been made, but if you have been thoroughly evaluated, it is highly recommended that you allow the debt professional to proceed with their recommendation.
Being recommended for debt consolidation means that you must first meet the requirements for debt consolidation, which can vary from company to company. Generally the requirements include:
- Minimum Debt Amount: There is often a minimum debt amount for consolidation and a maximum as well. Generally the minimum for consideration will be between $5,000 and $10,000 of unsecured debt.
- Satisfactory Debt Status: Your debts that qualify for a consolidation need to be in relatively current status, no more than two months behind in payments and not in the process of default.
- Proper Debt Type: Only unsecured debt is generally acceptable for debt relief through consolidation. Secured debt (such as a car loan or home mortgage) cannot be consolidated as easily as unsecured debt.
Debt Negotiation and Agreement
The debt management company will need to get permission from you to interact with your lenders on your behalf and make payments for you. They will contact your lenders to let them know of the consolidation arrangement so that they do not get suspicious when they begin receiving payments from them rather than from you. Once all parties are agreed, your minimum monthly payment to the debt consolidation company will be calculated and established and it is this amount that you must write a check for each month at the appointed time in order to see all of your bills paid. The debt management company will then split your payment into the proper amounts and make payment for you to each of your creditors that are included in the debt relief consolidation.