Debt consolidation is not always as easy as it seems. But, a smart consolidation plan with doable terms can help you regain your footing. This piece can give you the facts you need to determine whether debt consolidation is smart for you.
Don’t be fooled by debt consolidators just because they claim to be nonprofit. Non-profit does not equate to good business practices. If you wish to figure out if companies are good at what they do, see if you can find them on BBB’s website at www.bbb.org.
If you’re struggling with high interest rates on your credit card, look for a card with a lower rate that you can consolidate all your debts with. This will reduce the number of payments you have and reduce the amount of interest you are paying. Once your debts are consolidated onto a low interest card, make sure you pay it all off before the interest rate changes to a much higher one.
Get a loan to repay debts, and then discuss settlement offers with your creditors. In many cases, creditors will be willing to forgive up to 30 percent of your debt if you get the rest paid off immediately. This does not negatively affect your credit rating and can actually increase your credit score.
Determine whether individualized payment programs are offered by your debt consolidation company. You cannot use a one-size plan that is applied to all debtors. Try finding a company that uses personalized payment plans. While they may seem costlier off the bat, they will generate long-term savings.
Speak with your creditors and try to negotiate a more favorable interest rate before going the debt consolidation route. For example, you can call your credit card lender and ask for a better interest rate on the condition that you stop using it, or ask to be placed on a fixed rate if you are currently on an adjustable one. They may offer you a great deal.
Consider a debt management program as a potential alternative to consolidation. Paying off bills that accrue interest can save you money because they will no longer be accruing that interest each month. Just find a good firm to negotiate lower interest rates on your behalf.
One monthly affordable payment to satisfy your debts is the goal of debt consolidation. It is prudent to target a five year plan, unless your specific debt requires different planning. Then you will have a solid schedule of payments and an attainable goal in sight.
If you are looking for a debt consolidation company in Florida or Maryland, realize that they do not need to be licensed. If you live in either state, make sure the consolidator is licensed. Your legal protection will be extremely limited if you work with a person that is not licensed.
Debt consolidation agreements in the context of Chapter 13 bankruptcies may help you hang onto real estate. As long as you pay off your debt by a certain time frame, whether it is three or five years, you should still be able to retain possession of both personal and real property. You might even get qualified to get interest eliminated from your debt within this time.
If something sounds like a scam, it probably is, especially when it comes to loans. Most lenders are going to know that you’re not a good person to loan cash to, so they’re going to charge you for the help. Anyone who offers you a great deal is taking you for a ride.
Consider your long-term financial objectives prior to seeking a consolidation program. If you aren’t in a hurry to pay debts, you may want to reconsider consolidating it. However, if freeing yourself from debt to put that money towards a different project is something you need, then debt consolidation could be your best bet.
Debt is no walk in the park. Put the above tips to use as well as any others you read to use debt consolidation wisely. By sticking to the information here you can get yourself back on track to the road of financial freedom.