When you know how to use it, the process of debt consolidation can be very helpful. It is important to consider your future before making any decisions about your financial health. Consolidating your debt could be the answer. This article will teach you all there is to know about debt consolidation.
Avoid storefront debt consolidation and major banks. Finding the right lender is as easy as searching on the web. Lenders found on the Internet can offer you a more streamlined process and not bog you down in paperwork and red tape. These lenders do not have to wait on a paper process to get these loans done quickly.
Prior to searching for a debt consolidation company, make sure you look through the FTC regulations regarding this topic. Read about things like debt relief and negotiation companies. It will give you some of the background you need to go forward with the process, and it will make you feel more prepared in general.
Do your research on your potential debt consolidation companies. Not every one of these companies is best for your scenario. Some are not even reputable–there are a lot of “fly by night” operations in this market. Don’t fall into the trap. Research the companies fully before making any decisions.
Understand the difference between debt consolidation and a home equity loan. Many companies will guise a home equity loan (where you put your home on the line for the debt) as true debt consolidation. That’s not always the wisest move to make, especially if you have a family involved. Know the differences and the risks before making that decision.
Get a copy of your credit report before embarking on the debt consolidation journey. The first thing you need to do if you want your debt to be fixed is to figure out what’s causing your problems. You need to know your debtor and the amount you owe. This helpful information will help you develop a debt consolidation plan adapted to your situation.
Make sure you hire a reputable debt consolidation agency to help you manage your debt restructuring. Although you will find many companies offering to help you, few are really in it to benefit the consumer. Check first with government sponsored agencies that offer free credit counseling and will then refer you to a trusted debt consolidation service.
When you are exploring debt consolidation options, do not assume that a non-profit business is completely trustworthy or that they will give you the best terms. These types of companies can be predatory, and your loan terms can be very unfavorable. To find a debt consolidation company, you could use a recommended group or check out the BBB.
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.
Find out how the debt consolidation company is funded, and do not do business with them if they refuse to disclose this information. If they say they are a non-profit organization, make sure to check with the state to see if that is true. Also, if they say they are tax-exempt, check that out too.
Some creditors will consider your debt as paid off if you can give them enough cash to cover 70% of what you owe them. Contact your different creditors to see if they are interested in this kind of payment arrangement. Try gathering as much cash as possible so you can make a reasonable offer to your creditors.
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.
A truly reputable agency will provide education on managing your finances so that you avoid going into debt in the future. Sign up for their workshops or classes so you can improve your financial situation. If the debt consolidation counselor you are using does not provide these services, look for a different agency.
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.
Consolidating your debt into a loan doesn’t mean you have to cut up your credit cards. In fact, having a credit card which is being paid off is very good for your credit score. Keep one card, but limit spending on it and pay it off as soon as you use it.
If you are seeking debt counseling along with your consolidation loan, choose a non-profit company which doesn’t ask for money up front. They may ask for a donation monthly, whatever you can afford, but know that you don’t have to pay it if you don’t have the money to offer.
Before making the decision to hire a debt consolidation company, check out other options first. A lot of the time you’re going to be able to strike a deal with a creditor instead of allowing some company to help you with it. Be honest about the situation that you are in when telling your story.
Getting your debt consolidated is something that can put you back into control of your finances. Creditors are probably hounding you to pay your bills, but you have insufficient funds. Debt consolidation may be the best choice for your situation. Apply what you have learned in this article, and use debt consolidation wisely and to your advantage.