Is debt management getting the best of you? Are you completely overwhelmed every month when you see bills in your mail? If this sounds like you, there is help. Continue reading to learn more about consolidating your debt.
Be cautious about working with a company that has a lot of ads or that solicits through email campaigns. Good companies usually get referrals from other clients, which means they don’t have to resort to trying to drum up business through spam mail. Obviously, all companies will have some advertisements, but be wary of those that seem over the top.
Consider borrowing from your retirement account to pay your debt off. Contact the financial institution you opened a 401K plan with to see if you can borrow part of the money you saved up. This is a good way to pay your debt off quickly but you will have to replace the money you took from your retirement plan.
Consider the benefits of debt consolidation, even if you’re debt isn’t that heavy. For example, a debt consolidation loan with very favorable terms can save you a lot of money in interest every month. A single payment is also much easier to manage than many. Weigh the pros and cons, and see if debt consolidation can put you in better financial shape.
Bankruptcy may be a better choice for you than debt consolidation. Whether it’s Chapter 13 or 7, it will leave a poor note on your credit. However, if you’re already not able to make payments or get any debt paid of, you may already be dealing with bad credit. Bankruptcy could let you start over.
You can save a lot of money if you receive a 0 % introductory APR credit card offer that allows balance transfers. While you must be diligent and disciplined, transferring a balance from a credit card with a high interest rate allows you the chance to pay that balance off much easier. However, you must be able to handle this form of debt consolidation, or it will not help you at all.
If you are choosing a debt consolidation company, it’s important that you check them out for legitimacy. Ultimately, not only are you going to check with the Better Business Bureau, but you also want to see what your state’s consumer protection agency has to say about them. You want to play safe when it comes to debt consolidation so that you don’t find yourself in an even worse situation.
Always do your research when look for debt consolidation firms. Be sure you check online with the BBB to ensure you have not chosen a bad company that doesn’t treat its clients properly.
Understand that different debt consolidation plan may have differing levels of fees involved. These fees can be rather costly, so ask about them up front before making any decisions. If it appears you are getting hit with a landslide of fees, you may be better off choosing a different option.
Consider contacting a consumer credit counselor before signing the dotted line on a debt consolidation loan. Many people reach for the loan too quickly and fail to think it through. A good credit counselor will show you how you got into the debt and the best ways of dealing with it, which may or may not be with a debt consolidation loan.
Remember that filing for bankruptcy normally still allows you to keep your home. If you take on a line of credit which is secured by your home, you will lose it if you are unable to pay off your debt. Keep this in mind as you choose your path to financial freedom.
When creating a list of creditors, don’t forget a single company or person. Include your car payments, mortgage, medical bills, overdue library books, student loan, utility bills, phone bills, cable bills, internet costs, magazine subscriptions, and anything else you might owe. Be sure to make a comprehensive list so that you can easily figure out what your next step should be.
Ask yourself why you want to consolidate your debt. Debt consolidation is a good option if you need to make smaller monthly payments, save on interests and eventually get out of debt. If you can afford to make large monthly payments and cover the interests and charges your creditors are applying to your accounts, debt consolidation is not a good option.
If you borrow money to consolidate your debt, make sure you get a fixed interest rate. An interest rate that is not fixed can keep growing and eventually cost you more than what you originally owed to your creditors. Ask your debt consolidation counselor about the interest rate and make sure it is fixed.
Before taking out loans. see if you already have credit access or equity to pay off a bit of your debt. If your home has a small line of credit, you may be able to use the equity to pay a bit of your debt.
Remember that you may not be able to compound all of your debt into a single loan. You may have to take two or three smaller loans to cover it all. This will still offer you a lower overall interest rate and smaller payments, therefore it is still a great way to manage your debt.
When you sign up for debt management to help you with your consolidation plan, know that you will likely have to close your credit card accounts as a stipulation the companies make in return for reducing your debt or interest rates. The counselor should let you know about this up front.
Lots of debt consolidation information is available. The entire process can seem scary, but dealing with massive debt indefinitely is much more frightening. Use the things this article has taught you and get yourself back to where you were financially before all the debt.