Are you faced with a troubled financial situation that you feel like there is no way out of? Are your monthly expenses maximized, leaving you feeling much less than caught up on your bills? If so, debt consolidation can provide some relief. This plan helps you to combine bills into one payment that is often easier to manage. Continue reading to learn more.
Prior to searching for a debt consolidation company, make sure you look through the FTC regulations regarding this topic. Read about things like debt relief and negotiation companies. It will give you some of the background you need to go forward with the process, and it will make you feel more prepared in general.
To help you consolidate your debts consider borrowing against your 401k plan. Many employers allow employees to take a loan out against their retirement plans. One of the benefits to this is that you pay the money back to yourself. The interest rates are generally very low and the interest paid also goes back into your account.
To consolidate your debt, try taking out a personal or signature loan. This has become a limited option due to the credit crunch, however. Many lenders that used to offer unsecured, signature loans for consolidation do not anymore. If you find one that offers this option, be sure it's not a high-interest loan, even if it helps you lower monthly payments by extending the terms.
If you've got a very spotty credit history, understand that the loan rates you'll get from any bank will be relatively poor. You may be denied a loan, or the interest rate that's offered may be extremely high, 20% or more. You may need to look for professional help if this is the case.
If you decide to go through debt consolidation, contact the Better Business Bureau. The BBB keeps records of any complaints lodged against a company. By checking out the debt consolidation company, you can ensure that complaints have not been filed against the company. This is especially important because there are many fake debt consolidation companies.
You might borrow against your retirement plan if you are truly desperate to lower your debt. In this way, you are borrowing from yourself rather than from an institution. Be sure to pay it back within five years or you will face stiff financial penalties.
Make sure your paperwork is in order. You don't want to make any mistakes. A single error can hold up the process indefinitely.
You need to consider if debt consolidation is truly the answer to all of your problems. If you don't change your spending habits, it won't actually better your future. You have to commit to the process entirely, from saving money for emergencies to not spending on things you don't really need.
What fees come with your debt consolidator's services? Make sure they are all listed out and explained in your paperwork. Also inquire about the payment structure, and which creditors will get what each month. There should be a payment schedule that the company can provide to you that shows the breakdown.
Think carefully before signing up with a debt consolidation company. You may be in a state of panic or worry about your financial situation, and you may be acting in a rushed or desperate manner. Think carefully about what matters for you in the long run, and make choices accordingly.
If you are claiming Chapter 13 bankruptcy, using debt consolidation can help you maintain possession of your personal property. You can keep much of your personal or real property if you are able to uphold your obligations and pay off the debt within a 3-5 year time frame. You might even be able to eliminate all the interest charges during this time.
If you have the ability to make a lump sum offer, ask for a paid in full or a pay for delete offer. With this offer, the creditor will either remove the debt from your credit report or report that they were paid in full. This is more beneficial to your credit score than a paid by settlement report.
Debt consolidation can be a great option if you are drowning in debt, but only if you take the time to understand it first. By reviewing this article, you should now have a basic idea of the ins and outs of debt consolidation. Consider this information carefully, as it has the power to help you make a sound financial decision that will benefit your family.