Do you have a lot of debt? Is it becoming too much to handle? If this is the case, debt consolidation may be an option for you. Debt consolidation is a complex topic and you should keep reading to find out whether or not these strategies are right for you.
Are you on life insurance? You can cash it in and pay off your debts. Get in touch with your insurance agent and determine the amount of money you can obtain against your policy. Sometimes, you can use some of your payments into that policy to pay off debt.
Try filing for bankruptcy. Whether Chapter 13 or Chapter 7, it can be a bad mark for your credit. That said, if you can’t pay off a consolidated loan, you’ll end up with bad credit anyway. You can reduce your debts when you file for bankruptcy.
Interest Rate
If you receive a credit card offer through the mail offering a lower interest rate, consider consolidating your debts using the offer. You will save on interest costs and will only have one payment to make each month. If you consolidate things onto a card with an introductory low interest rate, then pay it off before that low rate expires.
Examine how the interest rate for your consolidated debt is calculated. A fixed rate of interest is usually your best option. This will allow you to know exactly what’s going to have to be paid during the loan’s life cycle. Beware of adjustable interest rate debt consolidation plans. Often over time they can lead to paying out more in interest than you were in the first place.
Never borrow money from someone totally unfamiliar to you. Loan sharks prey on your desperation. Choose a lender who is reputable, trustworthy and comes highly recommended.
Assess which debts should be consolidated and which ones are better left alone. If you have debt on a charge card that doesn’t charge interest, then it wouldn’t make sense to switch it to one that has a higher rate of interest. Discuss each debt with your debt consolidator to determine which ones should be included.
You might be able to get a temporary loan from your friends or family if you cannot get one elsewhere. If you do this, ensure you specify the amount you will need and the timeline that you can pay it back. Most importantly, you should commit to a set time to pay back the money and don’t break this commitment. You do not want to damage your relationship with someone who you are close to.
You should try to pay for things in cash once you are working on your debt consolidation plan. This helps you prevent yourself from accruing new debt. That could be what started your bad habit. By only using cash you are actually paying for things now with money you do have.
Try negotiating with lenders before going with debt consolidation. Call up your credit card firm and ask them if they can give you an interest rate which is fixed if you cancel the card itself. You may be surprised what your creditor is willing to do to help you.
Can you use debt management instead of debt consolidation? You will pay less and have your finances in order when debts are paid off quicker. Make some phone calls to find a company that will help you to negotiate lower payments and interest rates.
A debt consolidation plan should allow you to get out of debt in five years or less. Waiting longer can make you pay more interest and then it will be harder to pay off, so try sticking with a five year plan.
Debt Settlement
If you have a ton of debt and are considering consolidating, be aware that there’s two different kinds. Debt consolidation is very different than debt settlement. Consolidation means that the balance stays the same and your credit score won’t change. If you’re getting a debt settlement then you may get a lower balance, but it will negatively affect your credit score.
When talking about the issue of debt, there is a lot to choose from out when seeking help. If you think that debt consolidation is a good option, apply the tips from this article to find a reliable professional who can help you. That option has helped a lot of people get their financial life back on track.
