What are your thoughts concerning debt consolidation? This article delves in the different options available to you. It can really help but always know what the process entails. Not all of these companies and their offers are created equal. Continue reading this article to know what you need to make an educated choice.
Review your credit report before you decide on debt consolidation. The first thing you need to do if you want your debt to be fixed is to figure out what’s causing your problems. Therefore, determine your debt and the creditors you owe. You cannot rebuild your finances if you aren’t aware of this.
When you are exploring debt consolidation options, do not assume that a non-profit business is completely trustworthy or that they will give you the best terms. It could come as a big surprise when this seemingly innocent term results in an unfavorable consolidation deal for you. Go to a company recommended by a friend, family member or the Better Business Bureau.
After you’ve set up a good debt consolidation plan, contemplate how you got into your situation. You do not want to find yourself in debt again within a few years. Be honest with yourself and learn what made you find this situation in order for you to never experience it again.
Though most debt consolidation offers are legit and helpful, some are just scams. If a loan appears too good to be true, it probably is. Ask the lenders plenty of questions and be sure they’re answered before signing for their services.
You may be able to pay off your high interest credit cards by drawing some money from your 401K or retirement fund. Still, it should be a last resort, and you have to commit yourself to putting the money back in. Otherwise, the money is considered an early distribution of retirement funds, and you are on the hook for penalties and taxes.
Consumer Credit Counselor
Find a local consumer credit counselor to help you out. This will help you to get all of your debts into one account. Using a debt consolidation counselor may hurt your credit score, but going through your local consumer credit counselor will have less of a negative impact.
After your debt consolidation arrangement is in place, start learning to pay for everything in cash. You never want to start the credit card cycle again. You may notice that this was what got you in your current situation. Whenever you pay everything in cash, you are forced to only buy things with money you currently have.
You cannot use debt consolidation as a quick fix for money issues. A good counselor will help you analyze your financial situation. When you have your debt consolidation loan set up, you need to evaluate how you manage your money so you will have a better financial future.
Instead of getting debt consolidation done, think over paying the credit cards you have with the “snowball” tactic. First, select the card with the interest rate that is the highest. Next, pay it down very fast. Once you do this, use the money you save by not paying this amount and use it to pay off the next-highest interest card. This represents one of your better options.
Make sure the documents you get from a debt consolidation company are filled out correctly. This is when you’re going to have to pay close attention to things. Errors can result in the process being delayed, so be sure that you have filled everything out correctly.
Learn the physical location of your debt consolidation service. Sometimes, a state will not even require credential to open debt consolidation companies. That means you need to know that your firm of choice isn’t based there. This information should be easy to find.
If a debt consolidation company is located in either Florida or Maryland, they do not need a license. If you live in either state, think about finding a firm located elsewhere. There is not much legal protection if you’re dealing with an unlicensed debt consolidation company.
If you are working through Chapter 13 bankruptcy, a debt consolidation will help you keep your real property. If you are able to pay debts off within 5 years, you can usually keep your personal property. You can sometimes even qualify for having interest eradicated while paying your debt off.
Do you have some equity or credit you can use to pay off debts? For example, you can consider a home equity loan or line of credit.
The ideal repayment plan for debt consolidation should have your debt paid off in 3 to 5 years. A debt counselor that wishes to set a up a dept repayment schedule for longer that 5 years is a red flag that should send you to find another one who has a better strategy for you.
When you have a list of possible companies, check www.BBB.com for complaints. Scam artists will be reported repeatedly there.
Some places that you shop will allow you to save money by using their credit cards, but those cards have high interest rates. Be sure to pay off your department store credit cards at the end of every month. The only time you should utilize these particular cards is when you want to enjoy discounted prices during seasonal sales.
Don’t forget about any of your debts. Debts not included in the consolidation plan must still be paid independently, making the concept of consolidation a bit pointless. Make sure you utilize your credit report to get the big picture concerning your debt.
With any luck, you are prepared to move forward and consolidate your debts. You should now have the information needed to help you rid yourself of your debt. Debt shouldn’t be something that is overwhelming you any longer. Find a reliable debt consolidation company and let them help you get out of the situation.