A lot of people want to improve their financial situation. If you’re like most people, you do as well. That’s why it’s a good idea for you to think about debt consolidation. Debt consolidation can be the perfect way for you to take care of your bills for once and for all. Here are just a few debt consolidation tips to get you started.
Communicate with your creditors as much as possible. Let them know you fully intend on paying your debt back and ask if you can negotiate. Creditors know they have more chances of collecting on your debt if they stop charging you for late fees or interests and establish small monthly payments.
Before applying for a debt consolidation loan, contact the creditors you owe. Ask them if they can negotiate any of the the terms you are obligated to. Doing this prior to getting the debt consolidation loan will leave you in better shape to really minimize your overall debt once the loan is paid off and give you better figures to work with as well.
Know what your position is on collateral before applying for a debt consolidation loan. If you don’t have collateral of sufficient worth, the terms for your loan will not be as favorable. Without sacrificing your home, tally up your assets until you reach a number that satisfies the criteria for collateral and take it from there.
It is best to work with a debt consolidation professional who is a member of debt consolidation organization. Ask if they are a member of the National Foundation for Credit Counseling or of the AICCCA. A professional who is not a member of any recognized organization is not a good choice.
Find out where the debt consolidation company is located. Depending on which state they are in, the licensing rules could be different than in your own state. For example, Maryland does not require its debt consolidation companies to receive licensing. In that instance, you may want to choose another company.
When consolidating together all of your debts, try to negotiate discounts by paying off your debts in lump sums. In many circumstances creditors will be willing to accept lump sum payments of up to 60 percent off of the money you owe. With the defaults in place, creditors are happy to get something rather than nothing at all.
Know that debt consolidation only works if you don’t accumulate more debt afterwards. If you go back to living off your credit cards, then all you’ve done is worsen your situation. Instead, map out a plan of action for how you’ll live after the debt consolidation. For many this means paying via debit cards or cash, so you always are living with what you have.
Speak to an accountant before you get involved in a debt consolidation loan from a loved one. There are perks and problems associated with such a loan when it comes to income tax. The interest may be taxed, or they may receive tax deductions. Speaking to a pro will give you the scoop.
Almost all debt consolidation is non-profit. The IRS gives tax breaks to companies who offer services to clients who are consolidating debt. Non-profit does not mean free. These companies do charge fees for their services. They have to pay their employees, file paperwork and have other costs associated with running their business.
If you find a lender who offers you a great rate, time frame and the amount of money you need, take that information, in writing, to your current financial institution. They may be able to match or even better that offer just to keep you as a loyal customer.
Take an honest inventory of all your outstanding debts before you consider the best debt consolidation plan. Write each creditor down in a list and include the interest rate, amount owed and the payment date. This will give you an overall picture of which debts need to be addressed first.
Check out the national accreditation organizations which exist and choose a debt management company from their ranks. These organizations vouch for their members, so you can be sure that any company which works with them will be on the up and up. This is important when dealing with such dire financial issues.
Debt consolidation can be done by refinancing your home. Sometimes it is beneficial to refinance in order to pay off all your debt and pay it back with a lower interest rate. You can contact the bank of your choice and ask them if refinancing is a smart choice for you.
Join a support group. There are many support groups available within most communities. By finding a group of people who are going through debt consolidation, you can get many tips to help you get the most out of your money. During your time with the support group, you also have a chance to speak about your struggles.
As mentioned in the introduction, everyone wants their financial situation to get better. If you are serious about having more money in your life, start thinking about debt consolidation. With all the information in this article, you should be able to start as soon as today. When you have your debts consolidated you’ll feel much better.