Getting Creditors to Agree to Debt Consolidation

Debt consolidation can provide you with a positive solution to a major debt problem. Debt consolidation generally involves coordinating several existing loans into one big loan that pays them all of. This allows you to streamline your payments so you have only one payment and creditor instead of many. Debt consolidation usually also allows you to move the debt to a new loan that has a more favorable interest rate or a longer repayment period or both, resulting in less interest and more manageable payments. So, how do you get your creditors to agree to debt consolidation?

Understanding Debt Consolidation

Whether or not you have to get your creditors to formally agree to debt consolidation depends on how you approach the debt consolidation process. You generally have several main options when it comes to consolidating debt:

• Take a new loan, usually in the form of a credit card balance transfer, second mortgage or personal loan, and use the proceeds to pay off existing debt in full.
• Take a new loan and use the proceeds to pay off the debt in one lump sum, settling the debt for less than the full amount that you owe by getting the creditors to agree to take a lump sum payment for less.

If you opt for the first option, your creditors don't really have to agree to the debt consolidation. As long as you get approved for the new loan, you can just use the money from that loan to pay off all your old creditors. They'll be paid, the debt will be marked as paid, and you can get to work on repaying your new consolidation loan.

If, on the other hand, you opt for the second option and try to get your creditors to settle debt for less than what is owed, they will need to agree to do so. They will usually only agree if they don't believe they are going to get paid otherwise, so that means you probably will need to fall behind on your payments and then make them a debt settlement offer. If they choose to accept, you'll need to get the offer in writing before you send the payment to settle the debt.

Getting Help

Before you try to get a debt consolidation loan or try to negotiate with creditors, it is a good idea to speak with an experienced debt settlement attorney. Your lawyer can help you to make sure you get a fair deal as far as your debt consolidation loan, since there are many fraudulent companies that want to take advantage of people looking for a fresh financial start.