For those who are burdened with huge amounts of debt, their lives are often extremely stressful and difficult. If you take the time to educate yourself about debt consolidation, you can find the method that works best for you and your situation. The following tips and techniques will help you on your journey to becoming debt free.
Let your creditors know if you are working with credit counselors or a debt consolidation firm. They may decide to work directly with you instead, saving you money. This will help to take the stress and tension away from your life. When creditors understand you’re truly trying to manage your debt, they may be more willing to help.
Sometimes a simple call to creditors can help you get a lower payment. Many creditors are more than willing to work with consumers to resolve their debt situation. 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.
Filing for bankruptcy is an option you should explore. A bankruptcy, whether Chapter 7 or 13, leaves a bad mark on your credit. That said, if you can’t pay off a consolidated loan, you’ll end up with bad credit anyway. A bankruptcy filing will help you reduce debt and regain financial control.
When seeking a consolidation loan, look for low, fixed rates. Without this, you won’t know what to pay every month and that can make things hard. A quick loan with quality terms is the best option for you.
An offer for a new credit card that features a low interest rate can be a powerful asset in a plan to consolidate your debts. Making only one payment monthly can be helpful, and it can save you a lot of interest, too. After consolidating debt, the next step you must take is to pay all that debt off before your introductory rate happens to expire.
Refinance your home to help get you in the clear with your debt. Mortgage rates have been low lately, and that means now would be a great time if you’d like to consolidate the debts you have this way. You might even have a lower mortgage payment.
You may be able to pay off your high interest credit cards by drawing some money from your 401K or retirement fund. Do not consider this unless you know for sure you can pay back the amount withdrawn. You have to pay taxes and fees for a penalty if this doesn’t occur.
When you’re dealing with a debt consolidation agency, you’ll want to ask if the counselors are certified. You’ll find companies that you can trust through the NFCC – the National Foundation for Credit Counselors. Doing so will give you confidence in your decision and choice of company.
If you really need to escape debt, think about taking money out of your 401K. In this way, you are borrowing from yourself rather than from an institution. Before doing this, be sure you understand all the terms and conditions associated with such a risky transaction.
One thing you can do to get debt consolidation services would be to borrow money from people you know. However, keep in mind that this can be dangerous because if you do not repay the money, you can destroy your relationship with this person. Usually debt consolidation should be a last resort, not a first choice option.
Ahead of seeking debt consolidation, talk to your creditors about lowering your rates. 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.
The best debt consolidators will teach you how to better mange your finances and how to get out of your debt using free educational resources. If they offer it, sign up for workshops or classes to learn more about fixing your financial situation. If your counselor doesn’t offer this, hire a different debt consolidation agency.
Once you complete your list of creditors, find out details on each specific debt. Note the full amount owed, interest rate being paid, and required monthly payment. This will help you when you are comparing your current debt to any loans you are offered.
Living in debt is extremely stressful and it is important that you take action to get out of debt as quickly as possible. By choosing to do something about it, you are taking a step in the right direction. Hopefully you have learned what you need to know here so you can get your finances back into order.