Do you feel like you are drowning in debt? Is it becoming too much to handle? If so, you may find that debt consolidation is right for you. There is much to be learned about this process; keep reading to determine whether or not it is the right thing for you to do.
Avoid choosing a debt consolidation company only because they are non-profit. Contrary to what you may believe, “non-profit” does not always equate to great. It is a good idea to check with your Better Business Bureau to find out their ratings and reputation.
Look for a debt consolidation loan with low fixed rates. Everything else will not give you a definite idea of what you need to pay every month, and that can be tough. Look for a single loan that has the terms laid out through the duration of the consolidation loan, and one that will leave your credit in a better place when it is paid off.
Consider applying for a low interest credit card in order to consolidate debts. You end up with only one bill to pay each month, and the interest is much lower. You will have to pay the card off quickly before the interest rate goes up.
Never borrow money from someone you’re unfamiliar with. Loan sharks prey on your desperation. Always use a legitimate lender who charges reasonable interest.
Consider taking out a consolidation loan to pay your debts. Then, call and try to negotiate a lower settlement with your creditors. You may be surprised to learn that the average creditor will settle for far less than you owe, and sometimes that amount is as low as 65%. Your credit ratings won’t go down. In fact, it may even go up.
Be on the look out for scam companies when you are looking for help with debt consolidation. Remember that if it looks too good, it most likely is. Before committing to a debt consolidation program, ask questions.
See if your prospective company employs certified professionals. Check with the NFCC if you’d like to find counselors and companies that have a good reputation. This will allow you to rest easy that the company you are using is trustworthy.
You may be able to consolidate your debts by borrowing money from an acquaintance. Before you do so, however, carefully consider the impact that such a loan could have on your friendship, particularly if you run into trouble paying it back. Debt consolidation is a final chance to pay your debts, therefore you’ll need to be fully committed to ridding yourself of your debts.
Think about talking to creditors before doing debt consolidation. You should speak with your lenders to see if they would be willing to negotiate a lower interest rate if the card is no longer used, or switch over to a plan that has a fixed rate of interest. Without trying, you’ll never know what could be offered.
Build a comprehensive budget. You must start to realize how you’re spending your money. You need to become financially aware so you don’t repeat your mistakes in the future.
Maryland and Florida do not require debt consolidation firms to be licensed. If you are located in these states, consider working with a debt consolidation counselor from out of state. If you choose to use a company that is not required to be licensed, you could end up in some trouble with no legal recourse.
After making a list of all your debts, keep accurate records of the money owed to each creditor. It’s important to list what you owe on every debt, the amount of interest on each and when payments are due. You will need to know this and more as you proceed with debt consolidation.
If you are in a lot of debt and are considering debt consolidation, know there are two kinds. These include debt settlement and debt consolidation. Consolidating debt means that the balance won’t be reduced, but your credit won’t take a negative blow, either. When settling your debt, you will reduce your balance; however, your credit will be negatively impacted, too.
Look at all your options regarding your finances. 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. Talk to them, tell them that you would like to remain in good standing and they may offer you lower interest rates or lower payments.
Calculate your total savings with a type of debt consolidation program may really help you. In addition, you should calculate your debt, interests, and additional fees that you must pay back. It will help you know whether or not the program you are considering is worthwhile.
Some departments stores have savings for those that use their credit cards, but these cards have high interest rates. If you’re shopping with a card from a store, you should get it paid off within a 30 day period so you don’t have to pay for interest. The only time it is acceptable to use them is for a great deal during seasonal sales at the store.
As far as getting out of debt goes, you have lots of choices. If you want to pursue debt consolidation, use the information here to make it a smoother process. This decision has helped many eliminate debt and regain financial freedom again.