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Debt consolidation is a popular debt management solution for the individuals struggling with heavy personal loans, medical or credit card debts. It’s a debt relief strategy where multiple debts are combined into a single one. This method simplifies the payment schedule for credit cards, loans or other unsecured debts.
Consolidating debts helps you to streamline your payments and manage debts in a better way. It’s also much easier to remember the due date of payment. Hence, debt consolidation is a great way to pay off your existing debts by paying less interest on your debt balances.
How does debt consolidation work?
Debt consolidation involves taking a personal loan from a lender to pay off all your debts at one time. After paying off your debts, you will only have to pay the loan you’ve taken.
What kind of consolidating loan options do I have with a bad credit score?
You may find difficulty in consolidating loans with a bad credit score. However, a secured loan is a possibility, but it requires a good amount of collateral that is to be kept as a security with the creditors.
When can I apply for debt consolidation?
Debt consolidation is the best debt relief option for those who owe multiple debts to different creditors. Credit card debt, for example is best suited for debt consolidation.
What are the pros of debt consolidation?
Consolidating your loans can provide you more time to manage your finances and forming a strategy to get out of debt. Also, you may end up paying much less as compared to multiple payments that you made earlier. You will get a clear path to eliminate your debts with debt consolidation.
Make just one payment
A positive and convenient way to resolve your debt problems
Debt consolidation seems to be a great idea for individuals for home improvement and paying off their existing debts. By debt consolidation you can take advantage of reduced interest rate on your debt amount every month.
How to Consolidate Your Debts?
Your debts are consolidated by combining them all into single payment each month. There are many different ways to consolidate the debts. That makes it essential to understand each one and seek out the best that suits your situation.
It’s entirely possible to pay off your debts yourself and reduce your balances for good. To succeed in this, you’ll have to pay your debts one at a time. Initially, you can begin with working on high interest rate credit cards while making minimum payments for other credit cards alongside. This is popularly known as the debt stacking method. It’s beneficial in long run as it will help you to save a lot of money. But at the same time, if the high interest credit card has a large balance, it might take a lot of time to pay it off.
The second method is the debt snowball method. In this method you start by paying off the lower credit card debts first. This would help you in paying your credit cards quickly and utilizing the extra money for paying off the second lowest balance. The process goes on until the payments are done away. However, it’s quite difficult to stay on a particular schedule to manage the debt payments. You may have to curtail your budget, which you might not be willing to do.
The second way to consolidate the debts is through debt consolidation loans. You can get a personal loan or a homeowner loan .If you are a homeowner or you own equity in a house, you can apply for a homeowner loan. The amount of the loan can be used to pay off all your debts. You will have to make a single monthly payment which would be less than your current payments. One of the loans may have a lower interest rate as compared to the average of one’s you’re currently paying. If you’re not a homeowner or do not own equity in a home, you may apply for an unsecured loan. Unsecured loans do not require any security. These loans have higher rate of interest in comparison to secured loans. If you’re in excessive debt, you might face difficulty in getting these loans. Using this strategy, you can pay off your multiple debts quickly. However, debt consolidation may land you in a big problem if you are not careful. You may end up paying more than if you had not opted for debt consolidation loans. So, you should understand and compare the different types of consolidation loans and accordingly choose the right one that suits you the best. The easiest way to find a suitable option is to compare the total costs and choose accordingly.
If you have multiple high interest credit cards, you have another solution that is to make a balance transfer. The balance card transfer involves applying for a high limit credit card with low interest. The low interest new credit card allows you to consolidate your existing credit card debts into a single debt. This will help you to pay off your debts at a low rate for a given amount of time. Some balance transfer cards offer promotional rates which are as low as 0%. A better idea is to transfer all your debts into a 0% interest balance transfer cards, which would give you a certain time frame ranging from 6 to 18 months during which you don’t have to make any interest payments. This would reduce your payments and make you debt free even before the end of promotional period. You should make sure that you read the fine print before signing up for the new credit card application. However, once your promotional period ends, your rate of interest may be subject to change. So, you should keep a check on what your interest rate would be before the end of your promotional period. If you fail to pay your debts during the promotional period, you may end up paying the same amount that you would have paid before transferring your balance. Balance transfer cards is a suitable option if you have high interest rate debts and the capability to pay them off within the promotional period.
One of the ways to pay your credit card debts is debt settlement. It’s a better option as compared to debt consolidation loan or balance transfer as it reduces the amount of debt you owe. This method is quite simple as you just have to contact your creditors and offer them the settlement which is usually less than what you actually owe. You should have proper documents to state that you are suffering from financial difficulties so that the creditors agree to settle for a less. You need to have a proper list of your assets and earnings. This will help you in proving your inability to repay the debt. If negotiation does not work out, the last resort would be to file for bankruptcy. You must have good negotiating skills and secondly you must also have proper cash in hand to pay for the debts, if debt settlement works out.
Why Choose Debts Advice?
Negotiating with creditors is a very time consuming and lengthy process. Also, you must be a good negotiator if you want to succeed. So, the better idea is to hire a debt relief company.
Debt advice has helped a lot of individuals to break free from debt and achieve financial stability. Our expert negotiators have always negotiated for better settlements for the financial well- being of our clients. With no upfront fees or charges, we have settled all the debts to the utmost satisfaction of our clients. When you choose us, you will have to deposit monthly payment each month, in an account that will be handled by you. Once you saved enough amounts, we will begin debt negotiating with your creditors.
If you do not have enough money in your account to settle down your debts, we will offer you a payment program. If you agree to it, we will consolidate your debts so that you just have to make a single payment each month.