The truth is that debt consolidation isn’t necessarily for everyone. If you only owe one financial institution money, it can’t help. If you owe multiple lenders money, you may be able to use it to help you reduce your payments and finally be able to come out from under your burden, so read on to learn more.
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.
If you are in over your head in debt, you may want to consider bankruptcy. A bankruptcy, whether Chapter 7 or 13, leaves a bad mark on your credit. If you cannot make your payments on time and are running out of options, filing for bankruptcy can be a smart move. Bankruptcy could let you start over.
If you own a home or land and have built up equity, you may qualify to take out a line of credit or home equity loan. These loans allow you to borrow against the equity of your home giving you instant access to cash to pay off your outstanding debts.
When considering debt consolidation, start with your local lending institution. They will be familiar with your credit history, work history and financial standing. This information can help to streamline your application process, making it easier for you to get accepted into a low interest debt consolidation plan as quickly as possible.
When you are consolidating debt, you must try to renegotiate with your creditors. Whether you are choosing to try and do this yourself first or have enlisted the help of a debt consolidation company, renegotiation is key to saving you a lot of money when paying off your debt.
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.
Ask your debt consolidation to list their services in writing. By requiring a legal contract stating what the debt consolidation company is to do, you can rest assured that all of your requirements are defined and completed. This legal contract can also protect you if you end up having to seek legal counsel against the debt consolidation company.
Choosing a consolidation loan means considering the rate. Not only do you need to know how high it is, but also whether it is fixed or variable. You never know what the future might bring as far as interest rates go, so a long-term variable loan can truly cripple you financially.
Remember, the debt consolidation company you sign up with will set the stage for your entire financial future. It is not a decision you should take lightly. Give yourself time to think things over before you sign with anyone. Even if you feel pressured by your creditors, keep in mind that a few days one way or another should not make much of a difference.
Debt consolidation agencies located in Florida and in Maryland do not have to be licensed. If you reside in one of these states, you may want to find an out-of-state consolidation firm to use. 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.
While engaging in a debt consolidation means a smaller bill in the short term, remember that it also means your payments will drag on for much longer. Can you afford that if something were to happen in the future? Some people find that paying off one of their smaller debts works better for them. Consider your options.
If you find a lender who offers you a great rate, time frame and the amount of money you need, take that information, in writing, to your current financial institution. They may be able to match or even better that offer just to keep you as a loyal customer.
If you want to get all of your debt consolidated, you may be able to borrow money from a family member. Your debt can be more easily paid back when dealing with family. You also might have a much lower interest rate than paying those pesky debtors.
Be very careful about choosing a lender for a debt consolidation loan. Check out several, and get information from the Better Business Bureau. If there is negative information about a company, choose a different one. Many Debt consolidation companies seem to offer the moon, and then slap you with fees and outlandish interest rates.
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.
You have learned a lot today all about how you can use debt consolidation to deal with your personal situation. All that is left is for you to put these tips into action. Take the time to truly plan for how you will tackle your debt and you will find it happens faster than expected.