Is It Time to Turn to a Debt Consolidation Agency for Help?
Contributed by Kris Griebe
Before you use a debt consolidation agency for help
Before you use a debt consolidation agency for help, you should be sure that you have exhausted all the easy solutions to your debt problems first. Have you considered borrowing money to pay off your bills from family members? This could be a fast and easy solution if your debt isn't huge and your family member is willing to cough up a few bucks.
What about borrowing from your 401(k) plan to help pay off your debts? Typically this type of plan will allow you to borrow up to half your vested balance. You usually have to pay the money back, with interest, over five years. But because you're paying the interest back to you, it isn't an extra cost. Think of it as forced savings. The drawback to using money from your 401(k) for debt consolidation, is that if you leave your current employer for any reason, you must pay the money back immediately or face taxes plus a penalty.
Choosing a debt consolidation agency
Finding a good debt consolidation agency is not an easy task, which means you will have to do some "legwork" before you find the best one for you. But there are a few things to keep in mind to help make your task easier and less frustrating.
First, look for a non-profit agency. You've spent too much money already, why pay out any more now? Non-profits get most of their funding from creditors, not you. Many will ask for only a nominal fee to enroll, so be sure to find out before committing yourself.
