There’s been a lot of interest in Rhode Island debt relief programs because Rhode Island currently ranks 7th in the debt per capita in the US. But there’s no need to despair if you are willing to work at reducing your unsecured debt to manageable proportions. Debt consolidation is something that you can consider.
Debt consolidation is basically putting all your (unsecured) debts in one basket, usually a loan with lower interest rates, and paying off that single loan. But it’s seldom as simple as that. For one thing, it may not be possible to get another loan if you have a low credit score.
If you have a lot of credit card debt and have been piling up the interest, late fees and penalties, then you could be looking at a significant amount that you may not be capable of paying off even at lower interest rates. You may want to consult with a debt consolidation service who will know the best way to manage your debts for a practical Rhode Island debt relief program.
But there are a lot of shady businesses out there masquerading as debt consolidation companies. You need to be careful when giving out information, or worse, trusting your finances to such outfits. Whether you are considering either debt settlement or debt management, you need to know the following things before you commit to any debt consolidation company:
The usual cost for reputable companies for debt settlement is between 15% and 30% of the total debt. Lower is of course better. There may also be fees upfront and a retainer of $50 a month, but top provider CareOne, for example, charges 5% of the total debt upfront and then 20% of the forgiven amount (usually 50% of the original), so check out a lot of companies before deciding.
For debt management, the usual monthly fee is $50, and there may be upfront fees as well. The value to debtors with debt management is that the service provider usually negotiates with creditors to bring the amount of debt down, resulting in considerable savings that is usually much more than the services fees. Creditors normally pay debt settlement companies a commission for the debts they negotiate, but that has nothing to do with the debtor. What is important is reducing the debt to manageable proportions. Ask the counselor for a rundown of the fees.
Speed of Resolution
The sooner you are debt free, the better. Debt settlement is usually a faster process, going anywhere from 2 to 4 years while debt management programs may take up to 6 years, depending on the amount of money owed and the creditors involved. The estimate of the time it will take should be provided by the debt consolidation company before you commit to a program.
Quality of Counseling
A good debt consolidation companies will have trained and experience financial counselors who specialize in debts. They should be able to provide helpful information and educational resources to help debtors change their financial habits. This is usually provided free of charge. Any company that fails to provide these and pushes for a particular debt consolidation program even if it is not appropriate should not be considered for debt relief in Rhode Island.