Is getting out of debt and having control of your finances something you are looking to do? Are you completely overwhelmed every month when you see bills in your mail? If so, debt consolidation should be of help. This article provides you with great tips to use when you’re thinking about debt consolidation.
Do not pick a debt consolidation just because they say they are “non-profit.” For example, a company saying that it is a non-profit agency is not necessarily good. 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.
Let creditors know you are using a debt consolidation agency. They could be willing to speak with you about making different arrangements. Your creditors may not be aware that you are trying to work with someone to resolve your debt. Work with a counselor to get your finances in control for the long run.
Interest Rate
A credit card with a much lower interest rate can help you consolidate your debts. You’ll save interest and have just one payment. When using only one card, pay off any purchases that have an interest rate that is introductory.
If you own a home, you may want to consider refinancing your home and taking the cash and paying yourself out of debt. Mortgage rates are generally lower than consolidation loans, making it a great option for homeowners. In addition, you may actually get a lower mortgage payment than your original payment.
You might be able to remove some money from your retirement fund to help you get your high-interest credit cards paid off. Only do this if you can afford to pay it back within five years. If it is not, taxes and penalties may make this decision more costly than you thought.
Once you have established a plan for consolidating your debt, you should aim to pay everything in cash. You won’t want to keep using credit cards. That’s why you’re in this situation in the first place. Using only cash means you get only what you can afford.
Take a loan out to help consolidate your debt. You risk ruining your relationship if circumstances prevent you from repaying them, however. This is truly a last chance way to pay off your debts, so only do it if you are committed to paying the money back.
See what a company’s privacy policy is like. Know how your information is kept in their system. The software should encrypt each individual file. If not, your personal information is exposed to thieves who can steal your identity.
Do you feel that debt management is the answer to your issues? If you pay your debts by managing your situation, you’ll be paying less in shorter period of time. You just need to find a company willing to help negotiate more advantageous interest rates.
Figure out where the debt consolidation business is located physically. Some states do not require the companies to be licensed. You have to be positive that the company you go with isn’t located in a state like this. It’s easy to learn this information.
Florida and Maryland do not require debt consolidation professionals to get a license. Avoid doing business with companies in those areas. You are not legally protected when working with an unlicensed professional.
Before approaching an outside loan provider, analyze your own resources in terms of home equity or available credit. You may be able to use the equity in your home to consolidate your debts.
Payments made through a consolidation service do not work to enhance your credit score, but payments made to your creditors directly will count. A consolidation loan will help you eliminate debt sooner but it will be notated on your credit report.
Debt Settlement
If you have too much debt and are thinking about consolidating, understand there are two different types. There is a difference between debt settlement and debt consolidation, the two ways you can combine all your bills. If you do debt consolidation, know that your credit won’t suffer but you will reduce debt. If you do a debt settlement, both your balance and credit score will go down.
The large amount of information available about debt consolidation can be confusing. The entire process can seem scary, but dealing with massive debt indefinitely is much more frightening. Take the steps you need to to reduce your debt and increase your peace of mind.
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