Debt consolidation is what a lot of people need when they’re dealing with a lot of different bills. Are you one of these people? Or is someone you know in this situation? Use this article to gain the knowledge that you’ll need for debt consolidation.
First, study your credit report. You need to understand what happened to get you into this mess. Doing this will prevent you from getting into financial troubles once again.
Before considering debt consolidation, check your credit report first and foremost. The first step to gaining financial freedom is knowing what debt you have. Know how much you’re in debt and where that money needs to go. You’re not going to be able to develop a solid plan in which you make different choices in the future if you don’t do all of this.
You should only sign up with a qualified debt counselor. Is there are certain organization that they are certified through? What is their education and training? This is the best way to determine whether or not you should deal with a company.
Do you currently hold a life insurance policy? Cash this policy if you want to reduce your expenses. Your insurance agent should let you know how much money you’d be able to have against your policy. Sometimes you’re able to borrow just a little of what you’re investing into the policy so you can pay off your debt.
Let your creditors know if you’re working with a credit counselor or debt consolidation agency. Some creditors will work with you to lower your interest or adjust payments as necessary. It’s critical to let them know; otherwise; they might not ever know you are talking to other parties. They can often lower an interest rate, forgive excessive fees or extend the time of your payoff date.
Interest Rate
Figure out how to formulate your own consolidation interest rate. An interest rate that is fixed is the best option. This makes sure you understand the exact rate you will always be paying. Be aware of any sliding interest scales. A lot of the time this will make it to where you have to pay them more interest than the money you owed.
Do not borrow from a professional you know nothing about. There are loan sharks looking to take advantage of your desperate situation. When you want to consolidate your debts, find a reputable lender who offers a competitive interest rate.
Use a loan to repay all outstanding debts, then contact your creditors to see if they will negotiate a settlement. You may be surprised to learn that the average creditor will settle for far less than you owe, and sometimes that amount is as low as 65%. This does not negatively affect your credit rating and can actually increase your credit score.
Check out all the companies in your area to find the best office of consumer credit counseling near you. Such a place will be able to offer financial advice and help. Working with one of these non-profit counseling services may not impact your credit score in the same way as private services.
Find out whether the people you are dealing with at a debt consolidation company are certified counselors. Check with the NFCC to find reputable companies and counselors. This will allow you to rest easy that the company you are using is trustworthy.
If you need to eliminate debt and feel desperate, you might borrow from your own 401k. It offers you the ability to borrow from yourself as opposed to borrowing from a traditional bank. However, understand that you could be negatively affecting your future by doing so; give it careful consideration.
Instead of using debt consolidation loans, try paying off credit cards using the “snowball” tactic. Pay off your highest interest credit card first. Then take the money saved from not having that payment and place it towards paying off your next card. It’s one of the best choices you can make.
Take time to research different companies. Check with the Better Business Bureau and other consumer watchdog groups to ensure that you do not entrust your finances to folks with bad reputations or who have a history of not fulfilling their obligations to clients.
Real Property
If you’re working on Chapter 13 bankruptcy you may be able to keep a hold on your real property with debt consolidation. If you’re able to get everything paid off within 5 years you may be able to keep your personal and real property. It is also sometimes possible to reduce or eliminate the interest during the payment process.
Borrowing money from a loved one can help you consolidate your debt. This could be an easier loan to pay back. In addition, your interest rate should go down.
Debt Settlement
If you’re in a lot of debt and wish to get it consolidated, know that there are a couple of types. Debt settlement and debt consolidation are both different ways to do this. With debt consolidation, you will pay one monthly payment that is used to pay your creditors. With this type of consolidation, your balance is not reduced; however, your credit will not be affected negatively. If you do a debt settlement, both your balance and credit score will go down.
Although department stores often promise savings for using their specific credit cards, they may charge higher than usual interest rates. If you use one, try paying it off within the next 30 days so that you don’t need to pay those interest charges. Only use these cards when there are discounted prices and stores are having seasonal sales.
This article should have helped make you more aware of whether debt consolidation could be of use to you. It’s simple to have all your debts combined into one monthly payment. Get out of debt quickly and take the stress away from your life by following the excellent tips you just read about.
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