Are you swimming in debt? Instead of letting this situation overwhelm you, look for an efficient solution. If that’s the case, you may wish to consider debt consolidation. Continue reading to learn what you need to know about debt consolidation.
Review your credit report before you decide on debt consolidation. You should know where your debt came from. Who do you owe? How much? Without this information, you cannot get out of debt.
If you have been paying into life insurance, it may help you out. Cashing in your policy will allow you to get out of debt. Call your insurance agency to see if you can cash in your policy. Sometimes you can pay your debt by borrowing a portion of your investment.
Minimum Payment
Just contacting your creditors often opens doors to lowering your monthly payments. A lot of creditors are going to work with people so they can get rid of their debts. If you cannot afford the minimum payment on your credit card, call the company to explain your problem and they may allow you to lower the minimum payment, but will discontinue the use of your card.
Bankruptcy is something you should seriously consider. Bankruptcy does negatively affect your credit. However, if you’re unable to pay your payments, you credit is already suffering. When you file for bankruptcy you will have a fresh start.
If you are a homeowner in need of debt consolidation, consider the possibilities of refinancing your mortgage and using the money for debt relief. Rates are low, so it is the best time to consolidate what you owe this way. In addition, your current mortgage payment could be less than what you had started with.
When you’re thinking about debt consolidation, consider how you first put yourself in this position. You probably don’t want to be in the same place in a few more years. By understanding what got you into trouble, you can avoid repeating your mistakes.
When you’re dealing with a debt consolidation agency, you’ll want to ask if the counselors are certified. Check with the NFCC to find reputable companies and counselors. In this manner, you can be sure of getting solid advice and assistance.
Once you start your debt consolidation plan you will need to pay in cash for most everything. You never want to start the credit card cycle again. These things may be what caused your large debt. With cash you make sure you don’t spend more than you can afford.
If you’re trying to find a place that gives you the option to consolidate your debts, be sure you’re able to spend the time needed to do some research. Inquire with the BBB to make sure you can trust your chosen company.
Refinancing your mortgage can help you stay away from debt consolidation. Your mortgage payment may be reduced resulting in more money to pay towards your debts. You will save money this way instead of consolidating your debt.
Aim to pay any debt consolidation loan off within 5 years, regardless of what they tell you. The longer it takes to pay off the loan, the more interest you’ll pay.
Debt Consolidation
Remember, paying creditors via a debt consolidation company is not going to do anything to fix your credit score. However, directly paying creditors does. It can quickly help you pay down your debts, but there will be a footnote added to any credit report stating that a debt consolidation program was used.
There are two distinct types of debt consolidation. The two programs available are debt settlement and debt consolidation. If you do debt consolidation, know that your credit won’t suffer but you will reduce debt. If you receive a debt settlement, your balance may be reduced, but your credit will take a severe hit as well.
When you have a list of possible companies, check www.BBB.com for complaints. If any are scam artists, you will find numerous reports, allowing you to avoid those companies.
A debt consolidation agent will not only provide you with the ability to negotiate with your creditors, but will also accept your payment and then divvy it out to each lender. If a service only offers a consolidation loan, you are probably not dealing with a legitimate business. Find a pro that can provide a loan to you and help you manage payments.
When doing debt counseling, try finding affordable ways for rewarding yourself. For instance, award yourself for each debt you pay off. When the debt has been paid off, try going out with a loved one. Head out to a restaurant and have a moonlit walk.
Save Money
Look for a way to save money on your bills. Perhaps you can save money on gas and car maintenance by carpooling to work with others. Doing so could drastically cut down on how much you spend on gas in a week.
Keep in mind that a debt consolidation loan is merely trading out one type of debt for another type of debt. More debt isn’t actually paying off your current debt. You need to learn to make wiser financial choices to prevent the problem from happening again. Start by calling the creditor with your highest debt and ask to negotiate a lower, lump sum payment. Try this with each creditor and you may be pleasantly surprised at what you can accomplish. Soon you can take care of debts on your own instead of getting a company that does credit counseling paid.
You have many different choices as far as dealing with your debt. If you think that you may need debt consolidation, use the information that you gained from this article to have the process go as smoothly as possible. This choice has helped many dig their way out of debt and find their financial freedom once again.
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