Dealing with a huge mounting personal debt is not favorable to anyone. However, this sort of dilemma is all too common, especially for those who have yet to explore possible debt consolidation options. Continue reading to see what options you may have to help you get out of debt.
When considering your choices for consolidating your debts, keep in mind that even a company who claims to be a non-profit will have substantial fees associated with their service. This term is often used as a disguise for predatory lenders and you could end up with very unfavorable loan terms. Try to seek out a personal recommendation or look up companies on the BBB website.
Do you have life insurance? Many life insurance policies allow you to cash in your policy. Talk to a life insurance agent in order to discover how much money you could get from your policy. Sometimes, you can borrow part of what’s invested in the policy to help pay off debt.
Inform creditors that you’re working with a consolidation service. These people might try to assist you in this process, and they may even talk about alternative arrangements. Your creditors will see it as a good sign that you are trying to improve your financial situation. Knowing you are attempting to make things better might help your case.
When considering a debt consolidation loan, look for one with a low fixed interest rate. If the rate is variable, you will never know how much the total loan will cost you until the end. A fixed rate loan will help put you in a better financial position.
Ask about your debt consolidation company’s interest rate. Fixed interest rates are the best. This will allow you to know exactly what’s going to have to be paid during the loan’s life cycle. Variable rates are nothing but trouble. You may even end up paying more in interest.
Never borrow from unknown entities. There are many loan sharks out there who might take advantage of you. Always use a legitimate lender who charges reasonable interest.
Call each of the creditors you owe money to in order to discuss a settlement. Once you have an overall total, talk to your bank about getting one loan to cover payment on all of your debt. You would be surprised to know that a creditor will more often than not accept around 70 percent if you offer a lump sum. Your credit score won’t go down when you use this method either.
Family Member
Persons looking to consolidate debt might be able to do so with a personal loan from a friend or family member. However, this should be a last resort because you never want to owe a family member money when you’re going through tough financial times. Only do this if you are going to pay it back, since this might be your last chance.
Before using a credit consolidation company, ask them what their privacy policy is. Find out how your sensitive information will be stored. Question whether or not their computer system has encrypted files. If it is not, then your credit information may be available to prying eyes which can result in your personal identity being stolen if the computer system gets hacked.
Ask the debt consolidation company about the fees they charge. You should be provided with a detailed list of fees that they charge for their services. Just bear in mind that financial professionals like this have to perform a useful service before billing you or collecting fees from you. Never agree to fees paid just to set up an opening account.
Write down the details on all the debt you have. This needs to have a due date if there’s one, how much is owed, the amount of interest you’re paying, and the amount you pay monthly. This is all vital information to create a debt consolidation plan that is most beneficial to you and your circumstances.
A debt consolidation program can help you hold on to some of your assets in some cases of Chapter 13 bankruptcy. You are allowed to keep real and personal properties in many cases if your debts can be paid down with three to five years. You may even qualify to have all interest eliminated from your debt during this process.
While struggling with debt is not a favorable situation, so many people are plagued with this dilemna. When you learn about the ins and outs of debt consolidation, help will be on its way. Use the advice from above to get started with your debt relief.
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