What is debt consolidation anyway? Is it a way to miraculously fix all of my financial problems? How can I use it in the smartest way possible? For answers to questions just like these, continue reading this article. It has all of the tips and tricks you’ve been looking for.
Find out which debts you have that will not be covered in debt consolidation. While most debts can be consolidated, there are a few that cannot, such as some student loans. You need to make sure that you know what will be covered and what will not, before you sign up.
Lots of people succeed at lowering payment obligations with a simple call to creditors. Many creditors are happy to help debtors who are trying to pay off their debt. If you cannot afford the minimum payment on your credit card, call the company to explain your problem and they may allow you to lower the minimum payment, but will discontinue the use of your card.
Know what you’re getting into. This is critical. Before you sign up for any debt consolidation program, be crystal clear about the terms. Not only that, but if you’ve taken out a debt consolidation loan, make sure you are sure that you got the best loan rate available. Find out as much as you can.
When it comes to dealing with debt consolidation, make sure that you relax. This practice is very common and will help improve your finances when all is said and done. You have the opportunity to lower monthly fees, lower high interest, eliminate late fees, put a stop to those harassing phone calls, and eventually become debt free. You can bounce back from this, but you must keep calm and pay attention to your payment plan.
You can get a loan taken out so you can pay off your current debts. Then you’ll be able to speak with your creditors so you can see if they’re able to settle with you. Most creditors will allow you to pay a lump sum of 70 percent of your balance. This tactic has no adverse effects to your credit score; it can in fact improve your credit standing, especially if it frees you from making delinquent payments.
Some creditors will consider your debt as paid off if you can give them enough cash to cover 70% of what you owe them. Contact your different creditors to see if they are interested in this kind of payment arrangement. Try gathering as much cash as possible so you can make a reasonable offer to your creditors.
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.
Find a debt consolidation agency that hires qualified counselors. Ask about the background and the certification of the counselors before becoming a client. Ideally, a debt consolidation counselor should be certified by the NFCC or another recognized professional organization. Do not work with an agency that does not hire qualified staff.
When evaluating whether to use a certain debt consolidation agency, see if they are licensed by an outside organization, preferably the NFCC. Test them as well by seeing if they know how your debt consolidation situation is going to be affected by your state’s laws. Each state is different, and you need a licensed and certified debt specialist that knows about the different laws by states.
When going through debt consolidation, it is a good idea to have a debt management plan. This usually consists of getting some advice by seeing a debt councilor from credit counseling organizations. They will work on a budget with you where you can still afford to pay all of your bills.
While engaging in a debt consolidation means a smaller bill in the short term, remember that it also means your payments will drag on for much longer. Can you afford that if something were to happen in the future? Some people find that paying off one of their smaller debts works better for them. Consider your options.
Get copies of your credit report before you talk to a debt consolidation company. That way, you will be able to talk knowledgeably about what debts you have at any given moment. When a debt consolidation representative has the chance to really know what you are dealing with, they can offer you a more specific solution sooner.
If we have answered your questions, we hope you can go forward and use debt consolidation to fix your problems. If we have not, continue reading articles just like this one to find out all you can. The more you know, the better able you will be to decide if debt consolidation is for you.