If you’re really struggling with your debt, you may want to consider debt consolidation. But, just like most things, eliminating debt will take time. This process takes careful consideration and planning. The information below may help you make better financial decisions in terms of debt consolidation.
Are you the owner of a life insurance policy? You might want to consider cashing in the policy so that you could pay your debts. Your insurance agent should let you know how much money you’d be able to have against your policy. You may be able to borrow a bit of what you’ve invested to help you pay your debts.
Bankruptcy is something you should seriously consider. Any bankruptcy, whether Chapter 13 or 7, will leave a lasting ding on your credit reports. However, it is a solution for individuals who are already suffering from bad credit and in desperate need of financial repair. When you file for bankruptcy you will have a fresh start.
Interest Rate
Ask about your debt consolidation company’s interest rate. It is always best to choose an interest rate that is fixed. With a fixed rate, you are positive about your costs for the entire loan life cycle. Be wary of debt consolidation programs that offer adjustable interest rates. Often, they’ll lead to you paying much more for your debt over time.
Make sure you don’t borrow money from a company you haven’t researched. Loan sharks are looking to take advantage of you. Choose a lender who is reputable, trustworthy and comes highly recommended.
If you’re not able to borrow the money from a creditor, then perhaps you can get help from a friend or family member. Make sure you borrow only what you need, sign a loan agreement and stick to it. Avoid ruining your relationship with a loved one at all costs.
See if the folks who work at the debt consolidation company hold counselor certifications. Check with the NFCC to find reputable companies and counselors. This can help you feel more comfortable as you’ll be dealing with a good company.
When you get a good debt consolidation plan going, make sure you then start paying for things in cash. You should avoid relying on credit cards. That’s exactly the habit that got you into your current situation. When you use cash, you can only spend what you have.
Debt Consolidation
Debt consolidation is not a shortcut solution for long-term money problems. Debt will always be a problem if you are not willing to change how you budget and spend your money. 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.
Your debt consolidation agency will offer personalized recommendations. If the people you work with aren’t interested in your financial situation and don’t ask questions on how you see yourself getting out of debt, then immediately look for another company. Reputable debt counselors work with you and come up with a personalized plan.
Consider talking to your lenders before starting debt consolidation. Call up your credit card firm and ask them if they can give you an interest rate which is fixed if you cancel the card itself. You can’t be sure what they’ll offer.
When you are interviewing a debt consolidation company, inquire about any fees they may charge you. They should be able to give you details on the fees they charge. They can’t collect anything if they don’t actually provide a service. You should not agree to pay any set up fees to open an account with them.
What kind of fees will the company assess? Each of these fees should be explained and included in a written contract. Also you need to see what the payment is going to be divided like before it goes to the creditors. Obtain a schedule of payments from the debt consolidation company.
You may just find that debt consolidation will let you manage your debt, as long as you know exactly what it can do for you. While making a phone call is the starting point, you also need to know the basics and understand what you might be up against. This article has shown you the light; now is the time for you to follow through.
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