One of the myths about debt consolidation services is that everyone with debt qualifies. That is actually not true. Debt consolidation services may sound easy and simple in the adverts but the truth is far murkier than that.
5 factors that may disqualify you for debt consolidation
Able to Pay: You have to be making some money. Because debt consolidation services are a repayment plan you have to be able to pay. If you are steeped in debt and unemployed than bankruptcy may be a more realistic option for consumers.
Debt/Income Ratio: Your debt to income ratio also needs to be within certain parameters to qualify for debt consolidation services. You generally need to be able to pay something to the order of 1.8% to 2.2% of your combined credit card balances over the life of the terms of your debt consolidation loan. The rules for this are pretty rigid so you should be totally forthright with your debt consolidation services operator in the beginning or later on when they find out all the facts your plan could be turned away.
Income: Another thing about debt consolidation services and income is that you need to have a proven source of income and it needs to at least appear to be something that the debt consolidation service can rely on going forward.
Past: How have you behaved with your creditors in the past? Have you tried to use debt consolidation services and balked on them before? another lesser known portion of qualification for debt consolidation services is your past. If you have treated creditors with disregard, have turned your back on your responsibilities, or have otherwise behaved with contempt for authority that does come into play when they are deciding whether or not you qualify for debt consolidation services. Again it’s best to be as open and honest with your counselors on the front end about what has happened and what has been documented. If you have a case plead it in the beginning so that everything is on the table because your past can come back to haunt you.
Benefit: What’s the net-net benefit for you? Again this is a pretty rigid formula that falls within a pretty defined set of guidelines. Once all your debts have been entered and all that has been figured in, your eligibility for debt consolidation will be decided.
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