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The Federal Trade Commission (FTC) work directly with consumers on credit and fraud issues. They even provide free, reliable public education on lending practices. While much of their focus is on debt, rather than debt consolidation, it is very useful. SELF-HELP There are things that you can do to get out of debt yourself long before you take more drastic measures, like debt consolidation. The first is to develop a budget. These books can assist you build a plan to get out of debt and figure out if you need a debt consolidation. Next, contact your creditors and let them know that you are working on making ends meet. Try to be in contact with your lender so that your debt doesn't go to collections. You cannot be harassed. Lenders often work with people who are willing to pay. Your automobile can be repossessed any time you are in default. Read your loan documentation carefully. If you are approaching default, sell the automobile and payoff the loan. If you are going to be late on your mortgage, call your mortgage company and let them know. If you can't work something out with them, talk to a housing counseling agency. Some only assist on FHA loans, but most will assist anyone. If you get a debt consolidation mortgage, the rules may be a little different than you expect. These debt consolidation mortgages do offer, however, the incentive of tax advantages. Also, these debt consolidation loans generally take one to two months to close and require lots of documentation. During that time you must continue making payments on all of your debt. CREDIT COUNSELING AND DEBT MANAGEMENT PLANS A credit counselor can help you work on your debt when your own efforts have failed or stalled. Some charge outrageous, hidden fees or steer you into a debt management plan (an extreme form of debt consolidation). You want a certified credit counseling agency that is a member of the National Foundation for Credit Counseling. They work with you to develop a plan that helps you get out of unnecessary debt. If you need debt consolidation, a certified counselor can assist you figure out what kind and how much. It is where your creditors agree to special terms, you close accounts and you send your payments to the DMP. At the end of your DMP program, your debts are paid. It is not a good alternative to debt consolidation. However, with a very good company, a DMP can assist in the long run. Just be very careful. First, you should not have to pay high or monthly fees for credit counseling or a DMP. You should not hear a request for a "voluntary contribution" for either of these programs or a debt consolidation loan. This is true for anything. If you feel pressured to enroll in a DMP or they don't review your financial situation first, leave. You should not be enrolled in a DMP without first learning budgeting and other financial skills. Otherwise, you may face bankruptcy. DEBT NEGOTIATION PROGRAMS These are not DMP's or debt consolidation. And even if they do get some debt forgiven, that debt is reported as income to the IRS, who taxes you on it. If a DMP or a debt consolidation cannot assist you, you will probably end in bankruptcy. DMP's are the extreme measure. Most debt negotiation is a scam.
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Giles Rutter is a writer and webmaster who specializes in finance. He is a contributor to Debt Consolidation Assistance
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