What have you learned about debt consolidation? Do you feel like your massive debt has taken over your life? Too many creditors and too many payments? A debt consolidation service may be able to help you get that control back. Keep reading to learn all the options available.
Tell your creditors if you decide to work with a debt consolidation company or credit counselor. They may make you an offer so you don’t have to go this route. They need to know when you are considering other options. You may be able to help your cause when they know you’re attempting to work things out.
If you’re checking out debt consolidation, don’t think that a non profit company is going to be cheaper or better than other companies. Certain companies mask themselves as non-profit in order to fool people into using them, resulting in extremely high loan terms that you cannot get out of. Therefore, be sure you do your research on this company beforehand.
Think about bankruptcy instead. Bankruptcy does negatively affect your credit. However, if your debt becomes so large that you just cannot handle it, then chances are that your debt is already very poor. Filing for bankruptcy will allow you to start reducing your debt and get on the path to financial recovery.
Do you have life insurance? Many life insurance policies allow you to cash in your policy. Find out just how much money you will be able to receive against your policy. Sometimes, you can borrow part of what’s invested in the policy to help pay off debt.
Never borrow money from professionals you aren’t familiar with. When you’re in a bad spot – that is when the loan sharks pounce. If you want to take a consolidation loan, seek lenders with good reputations, offering fair interest rates.
Refinancing your home can sometimes help you when trying to eliminate and consolidate your debt. Mortgage rates currently sit at historic lows, so now is a great time to consolidate in this way. Your mortgage payment could end up lower than what you were paying originally.
When doing a debt consolidation, figure out which debts should be included and which debts should be kept separate. Consolidating a loan with a zero interest rate with a loan with a greater interest rate may not make sense. Review each of your current loans with the lender to assure you are making good choices.
Use a loan to consolidate outstanding debts efficiently. Negotiate with each of your creditors to resolve your debt to them via one large payment. Many will accept as much as 70% of that balance in one lump sum. This does not negatively affect your credit rating and can actually increase your credit score.
If you’re unable to obtain a loan, you may want to consider asking friends or family if they’d be able to help you. Make sure to specify exactly how and when you will pay the money back, and live up to your promise. Personal relationships need to be treasured before money.
You might be able to remove some money from your retirement fund to help you get your high-interest credit cards paid off. This shouldn’t be done unless you’re sure that this money can be paid back into your account. Otherwise, the money is considered an early distribution of retirement funds, and you are on the hook for penalties and taxes.
Once you begin a debt consolidation pact, all your purchases now should be made in cash. You never want to fall back into your old ways of having to use credit cards to pay for everything. This is exactly what got you into this mess in first place! When you use cash, you can only spend what you have.
With all that you’ve now learned, you can make the right next step for consolidating your debt. This decision must be handled with care and fit your situation. Give your debts the boot. You no longer have to be buried under a mountain of debt.
Don’t look at consolidation loans as a short-term fix for money management problems. You have to change the way you spend money to get rid of debt. When you have your debt consolidation loan set up, you need to evaluate how you manage your money so you will have a better financial future.
