Are you saddled with lots of debt? Is it becoming too much for you? If so, debt consolidation could be your ticket out. This process is lengthy, so read on to learn whether or not it’s a good option for you.
Carefully study your credit report before making any decisions. You need to understand what happened to get you into this mess. This helps you avoid making the same mistakes again.
Think about bankruptcy if consolidation doesn’t cut it for you. Any bankruptcy, whether Chapter 13 or 7, will leave a lasting ding on your credit reports. However, if you are missing payments and unable to pay off your debt, your credit may already be bad. If you file for bankruptcy you’ll be able to get rid of your debts little by little so you can recover financially.
Your credit report should be scoured before considering consolidation. The first step to correcting your debt issues is to understand how they all happened in the first place. Who do you owe? How much? You won’t know how to restructure finances if you do not know this information.
If you are homeowner, you can refinance your mortgage and use the extra cash to pay off your other loans. With mortgage rates being so low, it’s a great time to pay off your other debts. Your mortgage payment could end up lower than what you were paying originally.
Avoid choosing a lender that you don’t know anything about. Loan sharks know you need them. Before borrowing money for debt consolidation, find a lender that charges a fair interest rate. You should also seek the help of reputable lenders only.
These types of consolidating loans typically have zero effect on your credit rating. Some debt reduction options will adversely affect your credit, but debt consolidation only lowers the interest rate and total amount you pay on your bills each month. It can work well, provided you make timely payments.
Figure out if the debt consolidation company you’re looking into actually has qualified counselors. Counselors should have a certification from a professional organization. How can they prove their reliability and stability? This will allow you to know whether or not a company is worth the trouble.
Sometimes, you can use your retirement or 401K money to pay for credit cards. Borrow against your retirement fund only if you are confident about your ability to pay the money you borrowed. If it is not, taxes and penalties may make this decision more costly than you thought.
It is sometimes worth your while to ask a parent, sibling or close friend for financial assistance. Be sure you’re able to tell them when you’re able to pay things back and keep your promise. It’s something to be careful with so you’re not damaging a relationship with a loved one.
Find out if your chosen debt consolidator is also a licensed credit counselor. Check with the National Foundation for Credit Counseling, or NFCC, for reputable counselors and companies. This will ensure that you are dealing with a knowledgeable company that has employees who have the proper training and certification.
Talk to creditors if you’re using a credit counselor or debt consolidation agency. They could be willing to speak with you about making different arrangements. It’s critical to let them know; otherwise; they might not ever know you are talking to other parties. If they know you’re trying to get debts paid off they could be willing to assist you.
There are lot of options for your debt. 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.