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Debt settlement companies also charge a fee for their "service." Often, the fee is anywhere from 15–20% of your debt.

Think about it this way: If you owe ,000, your settlement fees would range from ,500–10,000.

Debt settlement is a scam, and any debt relief company that charges you before they actually settle or reduce your debt is in violation of the Federal Trade Commission. When you consolidate your debts or work with a debt settlement company, you’ll only treat the symptoms of your money problems and never get to the core of why you have issues in the first place.

You don’t need to consolidate your bills—you need to pay them off.

You consult a company that promises to lower your payment to 0 per month and your interest rate to 9% by negotiating with your creditors and rolling the two loans together into one. Who wouldn’t want to pay 0 less per month in payments?

But here’s the downside: It will now take you 58 months to pay off the loan.

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The enticingly low interest rate is usually an introductory promotion and applies for a certain period of time only. Be on guard for “special” low-interest deals before or after the holidays.

In almost every case, you’ll have lower payments because the term of your loan is prolonged. You are only restructuring your debt, not eliminating it.

You don’t need debt rearrangement—you need debt reformation.

Here’s why you should skip debt consolidation and opt instead to follow a plan that helps you actually win with money: The debt consolidation loan interest rate is usually set at the discretion of the lender or creditor and depends on your past payment behavior and credit score.

Even if you qualify for a loan with low interest, there’s no guarantee the rate will stay low.

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