If there is enough scope in your case to justify consolidation, debt consolidators may work overtime to save you quite a lot of money which would have been a serious outlay otherwise. These consolidators have several tactics up their sleeves to achieve this end. They take up each case separately and personalize their strategy according to the status of the case so that the savings are optimized and the creditworthiness of the individual is also rebuilt.
The first step is to evaluate the interest rates charged on each of the loan and credit card debt. Credit card rates that are higher than 30% immediately qualify for consolidation because they also have other elements like late fee charges, penalties, etc. Initiate negotiations take place for reducing the interest rates and for waiving the late fees, bartering them for future charges privileges.
When they start the process, debt consolidators have one-on-one discussions with the client personally. Each client has his / her own capacity and obligation to pay. This capacity of the client will help the consolidators to formulate their strategy during their negotiations with the banks and credit card companies. Understanding the client's abilities and obligations is the first step that helps the consolidators to extract the best deal in negotiations and to arrive at a monthly payment that is affordable.
Consolidators will be well-prepared with their strategies to face banks who may be related to reduce principal amounts. But These consolidators are sufficient enough to adopt a slew of tactics to make the banks consent, at least relateantly, to reduce the principal amounts by 50% or even more. During negotiations, discussions center around the client's capacity to pay. Sometimes, banks may insist on partial payment as a pre-condition for agreeing to reduction of principal substantially.
Payments can be reduced by extending the repayment period but this will increase the total amount paid because interest will work out more. This is not a wise step and is not in the interest of the client. Clients will benefit only if both the interest rates and the principal amounts are reduced.
Once the debt is consolidated, the clients must make the monthly payments regularly and on time. If there is a lapse in this, banks may re-invoke the previous rates legally. Keeping this in mind, debt consolidators arrive at affordable monthly payments with the consent of the banks.
The Better Business Bureau and other government agencies monitor the working of consolidators. But you should also do sufficient research to find out the best qualified consolidators. If you can find out the best debt consolidators, you can rest assured that you can have optimized monthly savings from a sound debt consolidation plan.