A Couple Of Things To Know Before Getting Into Debt Consolidation
Posted at by PConran on category Debt Consolidation
When you’re struggling with debt, you may realize that it’s more than you can deal with. You may feel frustrated and stressed, like there aren’t any options for you. Luckily, debt consolidation is a great option. Find out about it in this article.
It’s not uncommon for most people to learn that simply making a phone call to their creditors to get payments lowered actually works. Many creditors are more than willing to work with consumers to resolve their debt situation. Just give them a call and ask if you can have your interest rate fixed and the card cancelled.
Think about bankruptcy as an option. However, filing for bankruptcy will ruin your credit score. However, missed payments and high debt will also lower your rating. A bankruptcy filing can eliminate some of your debt and help you work your way towards financial freedom.
If you get an offer in the mail for a credit card with a low rate, think about consolidating your debts with this offer. This can save on interest and leave you with just one payment. Once your debts are consolidated onto a low interest card, make sure you pay it all off before the interest rate changes to a much higher one.
If you’re a homeowner, consider refinancing your house and using the cash to pay off your debt. Mortgage rates are generally lower than consolidation loans, making it a great option for homeowners. In addition, you may discover that your monthly mortgage payment is lower than you believed.
Don’t ever take a loan from someone you haven’t researched. A loan shark will take advantage of you. If you must borrow money, work with someone who has a strong reputation, offers a fair interest rate and has easily understandable repayment terms.
Sometimes, you can use your retirement or 401K money to pay for credit cards. You should only use your 401K if you’re absolutely certain you can replace the funds. If you cannot pay the money back, you will have to cover taxes, penalties and will not have a retirement fund.
Is the debt consolidation firm you are considering certified? Consult the NFCC to find companies that use certified counselors. By doing this, you can feel better about the people you are working with.
What is the address of your consolidator? Some states don’t even require credentials or licenses to create debt consolidation companies. For this reason you should check to see that the company isn’t in a state like that. This information can be found easily.
The goal of debt consolidation is having a single monthly payment you can afford. Typically, you should have a plan where your debts will be eliminated after 5 years. Some individuals chose shorter or longer plans for getting out of debt. This gives you a reasonable goal and time frame for payoff.
A good debt consolidation company should offer you learning resources for free. Try finding a professional who offers workshops or at least booklets you can use to learn about good financial habits. Go with another company if the debt counselor you are using doesn’t have these resources.
Maryland and Florida do not require debt consolidation firms to be licensed. If you live in either state, think about finding a firm located elsewhere. Your legal protection will be extremely limited if you work with a person that is not licensed.
It terms of climbing out of debt, consolidation may be the answer you need. Just continue to learn as much as you can so you can use it to your advantage. This article can help clarify what is wrong with your situation.