Nobody relishes the thought of facing massive debt. That said, this dilemma is very common, especially those that are considering debt consolidation. Continue reading to find out how debt consolidation can help you.
Talk to creditors if you’re using a credit counselor or debt consolidation agency. They might want to talk about other arrangements with you directly. This is crucial, as they’re probably unaware you’re speaking with others. If you show them you are trying, they might want to help you out.
Sometimes a simple call to creditors can help you get a lower payment. A lot of creditors are going to work with people so they can get rid of their debts. If you are unable to pay for your monthly credit card bill, call the company and tell them about your situation. Most companies will help reduce your payment, but may not allow you to continue to use the card.
Sometimes, you can use your retirement or 401K money to pay for credit cards. You should only use your 401K if you’re absolutely certain you can replace the funds. If you cannot pay the money back, you will have to cover taxes, penalties and will not have a retirement fund.
Interest Rate
You may decide not to consolidate all of your debts. If some debts have zero interest or an interest rate lower than your consolidation interest rate, you will want to keep them separate. Consult a financial planner to discuss your debts with so they can recommend ways to make wiser choices.
You need to look for certified counselors when you are selecting a debt consolidation agency. Check the agency out through the NFCC. This will help you to know you are working with professionals who can truly help with your financial situation.
Once you start your debt consolidation plan you will need to pay in cash for most everything. You want to avoid the habit of using credit cards again. That’s probably what happened to you in the first place. Paying in cash will ensure you don’t incur debt.
Consider getting a loan from a friend or family member to help you get out of debt. Sadly, if you don’t repay it, you may destroy your relationship. This is the final stop on the way to repairing your credit situation, but make sure that you are fully committed to do so.
Be sure to ask a debt consolidation company about their fees. Make sure they are all listed out and explained in your paperwork. Also inquire about the payment structure, and which creditors will get what each month. You should receive a payment schedule detailing your payment dates and amounts.
Choose a company that is within your geographic location. Some states don’t require credentials or licensing to begin these companies. Therefore, you should avoid companies operating in such states. The information should be fairly easy to find.
When you consolidate debt, your goal is to have a single payment that you can afford to pay every month. It is best to try to pay it off within five years. This will allow you to have a goal that you can work towards within a good amount of time.
Always set a budget. You should pay special attention to the way you are spending your money. If you learn more about making good financial decisions, you can builder a brighter financial future.
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. Working with a counselor who is not licensed means your debt consolidation counselor is not obligated to follow strict regulations.
Real Property
You can hold onto your real property more easily during a Chapter 13 bankruptcy if you go with debt consolidation. If you’re able to get everything paid off within 5 years you may be able to keep your personal and real property. You might even be able to eliminate all the interest charges during this time.
Generally, a debt consolidation company will work to eliminate your debt within five years. If a prospective counselor does not reference this type of time frame, look elsewhere.
Nobody wishes to struggle with debts all the time, but sadly, this is what a lot of people have to do. If you carefully consider the ups and downs of consolidating your debt, you may soon find that you can see a way out. Use this advice as you work to get out of debt.
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