If you are in too deep and constantly getting phone calls from companies demanding payment, debt consolidation can be a blessing. You can’t deal with your debt overnight, though. It’ll take time, and a plan is needed to succeed. As you read, you will learn how to make the correct decisions in your debt consolidation.
Find out if your debt consolidation agency’s counselors are licensed. Do these company’s have all of the proper certifications? Are they backed by institutions that have a good reputation for reliability? This is great for figuring out whether the prospective company is one that you should deal with.
Many people find that they can lower their monthly payments by simply calling their creditors. Many creditors are more than willing to work with consumers to resolve their debt situation. Let your credit card company know you cannot afford to make your payments, and they are likely to lower your monthly payment amount. During this time, however, your account will be closed to new charges.
Take out a loan to pay off your outstanding debts; then, call your creditors to negotiate a settlement. In many cases, creditors will be willing to forgive up to 30 percent of your debt if you get the rest paid off immediately. A lump sum settlement can increase your credit while lowering your overall debt.
Make sure any debt consolidation program you are considering is legitimate. If something seems too good to be true, it probably is. Get all of your questions answered so that you are never left in the dark.
You may be able to pay off your high interest credit cards by drawing some money from your 401K or retirement fund. This should be done only if you know you can pay the money back into your retirement fund. If you can’t pay the money back then you’re required by law to pay a penalty and tax.
Any debt consolidation organization should personalize a program to the individual. If you meet with a financial counselor who rushes you, doesn’t know your details and give you a cookie cutter type of financial plan, then don’t waste your money or time on them. Your debt counselor needs to be able to make a solution for you that’s personalized.
Be careful with the paperwork the debt consolidation agency sends you. You don’t want to make any mistakes. If you give the company any incorrect information, it can delay the loan you so badly need. Be sure to speak up and ask questions whenever necessary.
Choose a debt consolidation company that is accessible by phone and email. You could encounter questions or concerns after you sign the agreement; therefore, you will want to be able to contact them and have them answered. It is important to explore whether the customer service department of the company that you choose can meet these expectations.
You can hold onto your real property more easily during a Chapter 13 bankruptcy if you go with debt consolidation. By paying off debts within three to five years, you will likely be permitted to retain all property. You might even be able to get interest payments eliminated altogether.
Any loan which sounds like a miracle is likely a scam. Lenders know you are high-risk, so your loan is sure to be expensive. If an exciting deal is offered without any expense to you, then you are being duped.
Don’t allow a lender to request your credit report until you have agreed to their terms. This way you can keep the notes on your credit report to a minimum. Make this crystal clear to all prospective lenders so they have no doubt that you mean business.
Prior to accepting a loan, see if you have existing equity than can help you repay some debts. If you can use a home line of credit, that may be another way to get money.
If you want to get all of your debt consolidated, you may be able to borrow money from a family member. This could be an easier loan to pay back. In addition, your interest rate should go down.
Look at all your options regarding your finances. Lots of times, you can get better deals with the creditors than using another company to pay. Just let the creditor know what has happened and that you really want to fix the problem. They are likely to be happy to work with you.
The ideal repayment plan for debt consolidation should have your debt paid off in 3 to 5 years. If you meet with a professional who does not present you with a realistic solution, find a counselor who talks about paying your debt off in two to five years.
Start saying no to things. When your friends invite you out for an expensive dinner that they won’t be paying for, consider your situation. Rather, explain your situation and your financial goals and tell them you won’t be joining them on outings for a while.
Always take the time to look to see what things you can cut from your budget when you are trying to gain control of your debt. Perhaps you can save money on gas and car maintenance by carpooling to work with others. By securing colleagues willing to share a car for commuting purposes, you will save on gas.
Keep in mind that consolidating your debt does not mean you’re eliminating it, it simply means you’re trading in the many payments you’re making a month for one payment. Essentially, you’re still responsible for the same amount of debt. It’s not logical to pay off your debt by accepting more debt. You may end up paying on consolidation loans longer than you would have been paying on existing debts. Try calling your creditors to negotiate your debt. Follow this with the next highest debt, and so on. Soon your debt is going to be paid off without having paid a debt consolidation company.
If you approach debt consolidation strategically, it really can help. You can’t just place a call and watch it happen, you need to do your homework. Start putting this information to work for you so that you can eliminate your debt more quickly.