Debt consolidation is what a solution that many turn to when the bills pile up and then people aren’t aware of what to start paying first. Does this situation sound like your situation? Maybe you’re a friend of someone in this position.
If you’re checking out debt consolidation, don’t think that a non profit company is going to be cheaper or better than other companies. This term is often used as a disguise for predatory lenders and you could end up with very unfavorable loan terms. Go with a group that was personally recommended to you or look at the BBB.
Get a copy of your credit report before you decide about debt consolidation journey.The beginning step to taking care of your debt is understand how it began. Know exactly how much you owe and where that money needs to go. You can’t fix your problem if you don’t have all the facts.
Do you hold a life insurance? You might want to consider cashing in and pay your debts. Talk to the insurance agent in order to discover how much money you could get from your policy. You can borrow back a portion of your policy to pay your debt.
When considering debt consolidation, you need to research the consolidation companies through consumer reviews. This research will allow you to choose a company who will have your best interests in mind instead of just their company’s bottom line.
Mortgage rates are at an all time low, so now is a great time to consolidate in this way. Your mortgage payment could also be much lower than what you were paying originally.
You might consider drawing money out of your retirement fund or 401K to pay your high-interest credit cards paid off. Only do this if you’re sure you can put the money back within five years. You have to pay tax and penalty if you cannot.
Take out loans for outstanding debts and call your creditors in order to negotiate a type of settlement. You may by able to get a discount on how much you have to pay from your creditors. Your credit ratings won’t go down. In fact, it may even go up.
Interest Rate
When you are pursuing debt consolidation, be sure you’re thinking about what debts you have that are worth getting consolidated and which ones shouldn’t be. If some debts have zero interest or an interest rate lower than your consolidation interest rate, then consolidating that loan onto a card with any interest rate higher doesn’t make sense. Go through each and every loan you have with the lender to make wise decisions.
Figure out which of your debts should be consolidated and which should remain as they are. For example, it makes little sense to consolidate loans with zero percent interest onto higher interest loans. Consult with your lender or creditor to help you make wiser financial choices.
Ask about their privacy policy is. You need to know how they store your sensitive information.Find out if encrypted in their computer system.If you find anything lacking, then this means that people may be able to steal some of your information if the system were to be compromised somehow.
Ask a potential debt consolidation agencies. They should have a listing of their services and explains all service charges. Debt consolidation professionals are not able to take any of your money before performing a service. Don’t agree to pay them fees for opening an account.
You could use a snowball payment plan as an alternative to debt consolidation. First, select the card with the interest rate that is the highest. Next, pay it down very fast. Once this account is paid off, move on to the next card with high interests. This option is better than most.
You’re now aware of what it takes to become debt free via debt consolidation. It will be great to pay all of your bills with just one payment each month. You could end up enjoying a more stress-free live thanks to following through on the advice shared here.