When bills are overwhelming, debt consolidation can help you calm the storm. Are you in this situation? Do you know someone who is in a financial hole? If you find yourself in overwhelming debt, then you should keep reading to learn about debt consolidation.
Often, a new credit card with a low interest rate can be useful for consolidating some debts by paying them off using the new, low interest credit card. You will not only save interest, but you will also be left with only one payment. After your consolidation to one card is complete, try to pay it off prior to the expiration of the introductory rate.
If you’re a home owner, you might need to think over getting your home refinanced and using that money to help with your financial situation. Since mortgage rates are showing historical lows, this could be a great solution. Additionally, your mortgage payment may be lower than what it originally was.
It is possible to take money out of retirement to pay a particularly draining debt. This should be done only if you know you can pay the money back into your retirement fund. If you can’t pay the money back then you’re required by law to pay a penalty and tax.
When doing a debt consolidation, figure out which debts should be included and which debts should be kept separate. For example, it doesn’t make good sense to consolidate into a loan with higher interest. Go through each and every loan you have with their particular creditors so that you can see if you are doing things right.
Is the debt consolidation firm you are considering certified? 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 really need to escape debt, think about taking money out of your 401K. It allows you to borrow what you need from yourself instead of having you borrow from regular banks. Most importantly, make sure you understand the details before spending all of your retirement funds on paying back your debts.
Have you considered debt management? Paying off bills that accrue interest can save you money because they will no longer be accruing that interest each month. Find a debt consolidation specialist who can negotiate lower interests and charges on all your accounts.
Debt Consolidation Company
Be sure to understand the physical location of the debt consolidation company. Some states do not require any credentials or licensing to start a new debt consolidation business. Therefore, you should ensure that the debt consolidation company you are considering is not located in these states. It’s not hard to locate this information.
If you are dealing with Chapter 13 bankruptcy, debt consolidation can help you retain your property. If you are able to pay debts off within 5 years, you can usually keep your personal property. This process may even eliminate all the interest you owe on your debt.
If a loan is offered to you which sounds too good to be true, don’t fall for it. Most lenders understand risk and charge a higher interest rate for people who are loaded with debt. People that try to give you a deal that’s too good may be scamming you.
Interest Rate
Determine your average interest rate for the creditors to whom you owe money. You can then compare this number with the interest rate that debt consolidation agencies are offering to make sure that debt consolidation is a good option for you. If you already have a low interest rate, you may not need consolidation.
You need to be patient when trying to reduce your debt. While amassing debt is quick, paying it off is not. Develop a plan and stick with it to give yourself the best chance of being debt-free.
Remember, paying creditors via a debt consolidation company is not going to do anything to fix your credit score. However, directly paying creditors does. While you may reduce your debt, it could negatively affect your credit going forward.
Check out all of your options before hiring your debt consolidation company. Sometimes, creditors can give you better deals than what a debt consolidation company can provide. Inform your creditors of your situation and that you want to do all you can to resolve your debt. By doing this, they will be more likely to try to assist you in any possible way.
This article should have helped make you more aware of whether debt consolidation could be of use to you. You can get your bills put into one simple payment every month. Leave the debt behind and all the stress that goes with it by using what you learned here.
