When you’re in debt, it can damage your life quite a bit. Handling debt can prove scary, overwhelming, and can make you feel as though you have few options. This article will help you to realize that debt consolidation is still an option, and it may be the perfect solution for you.
Your credit report should be scoured before considering consolidation. The first step to fix your debt is to know where it came from. Make a list of all your creditors and find out how much you still owe them. It’s impossible to be successful if you don’t have this knowledge.
If you have been paying into life insurance, it may help you out. If so, consider cashing in your policy and using the funds to pay down your debt. Contact your insurance agent to find out how much you could get against your policy. You may be able to borrow against your investment to pay for your debts.
You can lower your monthly payment by calling your creditor. Many creditors are willing to help debtors conquer their debts. 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.
You might be able to get a temporary loan from your friends or family if you cannot get one elsewhere. Be sure that you be specific on when and how you will repay them, and keep your promise. You want to avoid hurting a relationship with someone close to you.
Find out whether the people you are dealing with at a debt consolidation company are certified counselors. You can contact NFCC for a list of companies that adhere to certification standards. Doing so will give you confidence in your decision and choice of company.
If you really want to pay off your debt, think about using your 401K. You borrow it from what you have paid into it. Make sure that you have a plan so that you don’t end up losing your retirement funds.
A debt consolidation company should try using methods that are personalized. If you notice that the counselors do not ask you specific questions about your financial situations and want you to quickly sign up with them, avoid them. The solution that they give you should be a personalized one.
Rather than a consolidation loan, try paying credit card balances with the “snowball” approach. This is done by paying off the credit card with the largest interest rate. Pick your next highest card, and add the amount you were paying on the first card to the amount you usually pay on this second card in order to get this one paid down fast too. This option is better than most.
Be careful with the paperwork the debt consolidation agency sends you. This isn’t the time to be sloppy and careless. They will cause delays and cost you money in the long run.
Speak with your creditors and try to negotiate a more favorable interest rate before going the debt consolidation route. For instance, ask for a break on interest rates if you stop using it altogether. Asking them can’t hurt because they would rather have something than nothing.
If you use a debt consolidation company in Maryland or Florida, they don’t require a license. If you live in either state, make sure the consolidator is licensed. When a company is not forced to be licensed, you enjoy little in the way of legal protection.
Debt consolidation loans do come with some fine print, so you’re going to have to inspect these terms and conditions. There may be hidden fees associated with your loan. You really need to get your debts lowered with this kind of a loan, and that’s why you should read the fine print.
Consider your long term goals before deciding to use debt consolidation strategies. If you aren’t in a hurry to pay debts, you may want to reconsider consolidating it. If debt reduction is essential for securing additional financing, consolidation may make sense.
Keep in mind that if you miss a payment, it’s going to appear on your report, and people that see this before they offer you credit may not be willing to work with you. Making timely payments on all of your debts will help you get a more favorable interest rate and terms when you apply for debt consolidation.
Debt consolidation can help you get out of debt. In order to put this financial tool to work in your own situation, you just need to gather sufficient information on the subject to make informed financial choices. There is a lot more to learn about debt consolidation before making a decision.