If you have found yourself drowning in debt with loan companies constantly harassing you for money, debt consolidation might be a helpful solution for you. Do not expect to get out of debt in less than a couple of years. The process is slow and gradual. Use the information below to make the best decisions about debt consolidation.
Think about filing for bankruptcy. Any bankruptcy, whether Chapter 13 or 7, will leave a lasting ding on your credit reports. However, if you’re already not able to make payments or get any debt paid of, you may already be dealing with bad credit. A bankruptcy filing can eliminate some of your debt and help you work your way towards financial freedom.
When thinking about different companies, you must research properly and go through customer reviews about the different companies. When you do this, you will ensure that the company you choose will handle your case in a responsible and professional manner.
After you’ve set up a good debt consolidation plan, contemplate how you got into your situation. The last thing you want is to repeat the behavior that got you into this mess. Be honest with yourself about how this all happened.
It is good news that your credit rating is generally unaffected by debt consolidation. In effect, with debt consolidation, you will be paying off your debt at lower interest rates and there are only a few cases where your credit rating would be impacted. It’s a very powerful option, as long as your bills are paid on time.
An option to help pay off those credit cards with high interest rates is by taking some money out of your 401k. Do not consider this unless you know for sure you can pay back the amount withdrawn. You will be required to pay tax and penalty if you cannot.
Try finding a good consumer credit counselling office in your area. Find a professional who can help you consolidate all of your debt into a single account while managing the payments. Using a service that offers consumer crediting counseling isn’t going to damage your credit as much as a debt consolidation service.
If you’ve exhausted your pool of potential lenders, you might be able to have a loved one loan you money. Be sure though that you spell out the terms of the agreement and know exactly when the money needs to be paid back. You don’t need to damage relationship with people you’re close to.
Only work with certified debt counselors. The National Foundation for Credit Counseling is a great place to check first. Doing so will give you confidence in your decision and choice of company.
Instead of getting debt consolidation done, think over paying the credit cards you have with the “snowball” tactic. Pay off your highest interest credit card first. Once the highest interest charge card is paid off, then go on to the next high interest debt. This choice is a top one.
See if there are individualized options for payments within the debt consolidation company that you like. Your situation is going to be very different from someone else and the company should take that into account. Search for a company that will set up an individualized payment plan. Although these may appear more expensive in the beginning, they actually will save you money in the long run.
Get documents filled out that you get from debt consolidators the correct way. You must pay attention here. If you make errors yourself, this can delay or mess up the process, so make sure you are filling things out correctly.
When speaking with a debt consolidation company inquire about their fees. A proper contract for a consolidation agreement has to be explicit about the meaning and purpose of all fees involved in the consolidation. You will also want to know information about your payment and how it will be allocated among your creditors. There should be a payment schedule that the company can provide to you that shows the breakdown.
Have you considered debt management? The quicker you pay off your debt, the sooner you will be financially sound. You just need to find a company willing to help negotiate more advantageous interest rates.
When consolidating debts, the outcome is to be able to have one affordable payment each month. You might choose to do this in 5 years, or choose a longer or shorter term. This gives you a specific goal to focus on, and a set payoff time.
You can become educated on debt consolidation for free through your debt consolidation company. Sign up for any classes or workshops that they offer. If the first debt consolidation counselor you meet with does not offer the resources you need, seek another agent.
When you know who you need to pay, get the details of the debt. You should outline the amount outstanding, the due date, the interest rate and the size of your typical monthly payment. You’ll need this information for debt consolidation purposes.
Never let a creditor or lender ask for your credit report unless you have already agreed to their individual terms of service. You never want to harm your credit if you’re not going to follow through with this lender. Ensure that any lenders you talk to understand this.
If you approach debt consolidation strategically, it really can help. The more you know, the better. While the information shared here is just one step, the second step in taking control is going to be your responsibility!