When you owe money to multiple creditors, debt consolidation can help. Consolidating your debts can make it much easier to reduce the amount that you owe. There are several things you should know about debt consolidation.
Do not assume a non-profit company is your best bet when looking at debt consolidations companies. Even scammers will use this term to try to suck you into their web with loan commitments and interest rates that are way too high. Go with a recommendation or check the Better Business Bureau on the company you are considering.
Try and confirm that you’re working with qualified debt consolidation counselors. Do the counselor have any certification? Do they have any certifications? This will allow you to know whether or not a company is worth the trouble.
Take the time to educate yourself and make an informed decision about choosing a debt consolidation program. You’ll want to find out if the company will be able to help you later on. You want a company that also offers financial education to help steer you away from this bad debt situations in the future.
Lots of people realize that their monthly payments can be reduced just by contacting their creditors rather than avoiding them. If you are behind on your payments, most of the time your creditors will be willing to work with you to get caught up. Call and speak with your credit card company if you’re not able to afford your payment. The companies are usually willing to work with you.
Think about bankruptcy if consolidation doesn’t cut it for you. 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. Bankruptcy is a good way to get rid of your debt and start improving your financial situation.
Consider taking out a consolidation loan to pay your debts. Then, call and try to negotiate a lower settlement with your creditors. You would be surprised to know that a creditor will more often than not accept around 70 percent if you offer a lump sum. This does not negatively affect your credit rating and can actually increase your credit score.
You might access your retirement funds to repay high interest debts. This should only be done as an absolute last resort since there are significant ramifications if the money is not paid back quickly. If you do not pay the amount back, you will be charged a penalty and will be required to pay income taxes on the amount.
Is the debt consolidation firm you are considering certified? Agencies such as the NFCC ( National Foundation for Credit Counseling) can recommend reputable companies with qualified counselors. Then you will know you are choosing the right firm.
Paying for things in cash is ideal after you get started with debt consolidation. You never want to fall back into your old ways of having to use credit cards to pay for everything. That might be the reason for your current situation! Paying cash means that you just use what you have.
Rather than getting a loan through debt consolidation, think about paying the credit cards off through what’s called a “snowball” tactic. Compare interest rates and start with paying off the account with the highest charges and interest. Then, start paying off the next debt; adding to it the money you would have used for the previously paid debt. This is a valuable option that you can benefit from.
What is causing your debt? You’ll need to know how you got into debt before you’ll be able to fix it with a consolidation loan. If you can’t control what caused this situation, then treating this symptom won’t help you in the long run. Find where the problem exists so you can put a stop to it, this way you’re in better shape to pay off those debts.
If it always seems like you are paying a creditor, debt consolidation could be the right thing for you. To get control of your finances again, try some of the powerful advice in this article. Your financial future is at stake!