Debt consolidation can be a great option if you’re struggling to pay off many creditors. This is can truly be life saver since you are only required to write out one monthly check instead of several. However, when using debt consolidation, you should be aware of some things first.
Do not pick a debt consolidation just because they say they are “non-profit.” Non-profit does not equate to good business practices. The best way to find out if any company is worth your business is by checking them out with the Better Business Bureau at www.bbb.org.
When shopping for a good debt consolidation loan, look for one with a low interest rate that is fixed. A lower rate will afford you the opportunity to combine everything into one simple payment each month; if not then it becomes difficult to pay it all back. Try to find a one-stop solution where you can get good terms for the loan’s lifespan, thus getting you on solid financial ground once repayment is complete.
You might be able to cover your debt by borrowing against your 401k plan or your IRA. Do not consider this unless you know for sure you can pay back the amount withdrawn. If you can’t pay the money back then you’re required by law to pay a penalty and tax.
Look for a reliable credit counselor in your local area. This type of office can assist you into combining your accounts in order to better manage debt. Working with one of these non-profit counseling services may not impact your credit score in the same way as private services.
You need to look for certified counselors when you are selecting a debt consolidation agency. You’ll find companies that you can trust through the NFCC – the National Foundation for Credit Counselors. This will allow you to know that you’re secure when you’re dealing with your debt consolidation.
Once you start your debt consolidation plan you will need to pay in cash for most everything. It would be a shame to once again use your credit card for everything. If that’s the reason you got into debt in the first place, then you need to take control! Using only cash means you get only what you can afford.
If you really want to pay off your debt, think about using your 401K. Borrowing from a bank or from another financial institution will probably cost you more than borrowing against your own 401k plan. However, understand that you could be negatively affecting your future by doing so; give it careful consideration.
Make sure your paperwork is in order. Make sure you fill everything out correctly and completely. Filling out something improperly will just make it harder for you to get the help you need.
Are you wondering whether debt consolidation can help put an end to your problems with debt? Paying your debts off through debt management can help you find your way to freedom faster, without paying fees to consolidation companies. Make some phone calls to find a company that will help you to negotiate lower payments and interest rates.
There is no law stating consolidators in Maryland or Florida must have a license. If you reside in one of these states, you may want to choose an out of state debt consolidator. You will have very little legal protection when working with a professional who does not have to be licensed.
If something is offered and it sounds like there is no way it could be true, it probably isn’t. You aren’t going to get offered something for nothing. People that try to give you a deal that’s too good may be scamming you.
Borrowing money from a loved one can help you consolidate your debt. You would only have one debt to pay each month this way. You may even be able to save on interest payments by making payments to one creditor rather than several.
Debt Settlement
When considering consolidating your extremely high amounts of debt, keep in mind that two different kinds of consolidation exist. Debt settlement and debt consolidation are two different things. If your debts get consolidated, you’ll get no reduction in your balance, but you will not have a problem with your credit score being lowered either. With a debt settlement program, your balances are reduced; however, your credit may suffer.
During debt counseling, treat yourself with small inexpensive ways. For example, set a goal to pay off one of your small debts. Once that debt is paid off, have a night out on the town with your significant other. Eat out and go to a movie, or do something else that is special.
Not all debt consolidation companies are created equal. There are programs that can lump all your debts into a single convenient monthly payment. These programs are able to combine installment loans with any revolving credit lines. Other programs only concentrate on consolidating your revolving credit lines into one payment.
If it seems you can never get a handle on your bills, you may need to look into debt consolidation. Use what you learned here to get your finances in order. This will help you to avoid more debt in the future.
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