Finding yourself under huge debt is a nightmare turned reality for many people. No matter how hard they try to pay off their debt it just never seems to go down. This is where debt consolidation comes in. Debt consolidation allows you to have one bill from one company every month.
The first important step is finding a debt consolidation company that is right for you. You can take advantage of the internet to make your search. Look at the review of other people like you, find the best recommendations.
The company that you choose will send you a monthly statement with all of your bills consolidated into one. They are the only company you will have to pay for.
This can be great advantage for those who have trouble keeping track of the numerous bills they need to pay each month. You won't miss or forget a payment. This can also be good for those who have many different, and possibly high, interest rates. Since the debt consolidation company will give you only one interest rate. Make sure that it will be much lower than many of your current rates, which will reduce your overall payment.
You no longer have to avoid creditors calling you. Since you are only dealing with one company there will only be one creditor to discuss any issues you may be having and one person to negotiate your payment plan.
However, there are many unreliable credit consolidation companies out there with only one goal in mind - to profit off of you and take your money. These are the types of companies that you should be avoiding!
How do you know which company is a legitimate company looking to truly help you? First, try to move away from companies who try to sign you into an agreement quickly or who do not take the time, to have an in-person consultation between you and one of their consultants
A good company will then determine if they can give you a lower monthly payment, without raising your overall repayment by doing things such as giving you a higher interest rate, than you already have. If so, they will let you know how much your payments will be and also help you determine exactly how long it will take to pay off.
Check your local Better Business Bureau, and any other consumer reporting agency you can find, to make sure there are not an overload of complaints about the particular company. If they have not been around long enough to tell then it is wise to go with a different company instead.
Debt consolidation can help you take control of your bills and mounting debt if it is done right. You have to pick the company you choose carefully and remember not to jump into an agreement to quickly. Take some time to read over and inspect any contract you are asked to sign.
Showing posts with label Debt Consolidation. Show all posts
Showing posts with label Debt Consolidation. Show all posts
Sunday, October 4, 2009
Get Out Of Debt
You're drowning in debt, credit card bills are piling up and you are highly stressed. Over 70% of the American population is seriously in debt. There are debt consolidation companies out there who claim they can help consolidate your payments and work with your credit card companies to get your interest rates down; but beware of such claims. I cannot count how many companies like these have gone under or have been in a negative spotlight because they have not followed through with their claims. Many people have lost money and ended up having to file bankruptcy because a debt consolidation company burned them. Don't get me wrong there are some good companies out there that will help you with your credit and debt problems, but you need to research different companies in order to find a reputable company. The first thing you should do is be sure to verify with the Better Business Bureau that the company doesn't have any complaints on record, if they do this should raise a "red flag" immediately. Another option is to check with family, friends and colleagues to see if they have used any of these companies or if they know of a good one.
You should be aware of:
- If you are having them pay your payments for you it will show up on your credit report. This usually lowers your credit score because creditors and financial institutions see it as one step before bankruptcy. Make sure you know what you are getting into and understand your contract completely.
- Explore the option of a home equity loan or line of credit. Banks usually offer better rates on home equity loans plus they have an advantage; they are tax deductible. If you have equity in your house and your credit history is fair, a home equity loan could be a great alternative for you to be able to manage your debt and pay it off quicker. There are so many programs available that there's a good chance you will be able to find one that will work for you. You need to choose a reputable bank or mortgage company and make sure you select a trustworthy loan officer.
- Credit unions are also a good option because they want to loan money for the interest and most of the time the loan officers aren't expecting a big commission check.
- Call up your credit card companies and try to negotiate a lower interest rate. Second, check to see if you can transfer balances to a lower rate. Start with the highest interest rate and go down.
- A mound of debt doesn't have to mean bankruptcy is the only choice. If your debt is out of control and you think you have run out of options then review the suggestions listed above and see if there is one that can work for you. Don't quit, with a little effort and research, you will be able to get your finances under control.
Before Choosing a Credit Counselor
1. Look for an organization that offers a range of services, including budget counseling, savings and debt management classes, and counselors who are trained and certified in consumer credit, money and debt management, and budgeting. Counselors should discuss your entire financial situation with you, and help you develop a personalized plan to solve your money problems now and avoid others in the future. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.
2. Avoid organizations that push a debt management plan as your only option before they spend a significant amount of time analyzing your financial situation. DMPs are not for everyone. You should sign up for a DMP only after a certified credit counselor has spent time thoroughly reviewing your financial situation, and has offered you customized advice on managing your money.
3. Many states require that an organization register or obtain a license before offering credit counseling, debt management plans, and similar services. Do not hire an organization that has not fulfilled the requirements for your state.
4. Avoid organizations that charge for information about the nature of their services.
5. Don't commit to participate in a DMP over the telephone. Get all verbal promises in writing. Read all documents carefully before you sign them. If you are told you need to act immediately, consider finding another organization.
6. Try to use an organization whose counselors are trained by an outside organization that is not affiliated with creditors.
7. Get a detailed price quote in writing, and specifically ask whether all the fees are covered in the quote. If you're concerned that you cannot afford to pay your fees, ask if the organization waives or reduces fees when providing counseling to consumers in your circumstances. If an organization won't help you because you can't afford to pay, look elsewhere for help.
8. Credit counseling organizations handle your most sensitive financial information. The organization should have safeguards in place to protect the privacy of this information and prevent misuse.
2. Avoid organizations that push a debt management plan as your only option before they spend a significant amount of time analyzing your financial situation. DMPs are not for everyone. You should sign up for a DMP only after a certified credit counselor has spent time thoroughly reviewing your financial situation, and has offered you customized advice on managing your money.
3. Many states require that an organization register or obtain a license before offering credit counseling, debt management plans, and similar services. Do not hire an organization that has not fulfilled the requirements for your state.
4. Avoid organizations that charge for information about the nature of their services.
5. Don't commit to participate in a DMP over the telephone. Get all verbal promises in writing. Read all documents carefully before you sign them. If you are told you need to act immediately, consider finding another organization.
6. Try to use an organization whose counselors are trained by an outside organization that is not affiliated with creditors.
7. Get a detailed price quote in writing, and specifically ask whether all the fees are covered in the quote. If you're concerned that you cannot afford to pay your fees, ask if the organization waives or reduces fees when providing counseling to consumers in your circumstances. If an organization won't help you because you can't afford to pay, look elsewhere for help.
8. Credit counseling organizations handle your most sensitive financial information. The organization should have safeguards in place to protect the privacy of this information and prevent misuse.
Debt Consolidation Loans
Debt consolidation loans are personal loans that allow people to consolidate their debt into one monthly payment. The payments are often lower because the loan is spread out over a much longer period of time. With one monthly payment and a fixed monthly payment schedule, you may actually see the end to those monthly payments.
Although the monthly payment may be lower, the true cost of the loan is often dramatically increased when the additional costs over the term of the loan are factored in.
The interest rates on personal debt consolidation loans are usually high, especially for people with financial problems. If you have a lot of debt, it can be hard to find a consolidation loan at a lower interest rate. Lenders frequently target people in vulnerable situations with troubled credit by offering what appears to be an easy solution.
Personal debt consolidation loans can be either secured or unsecured. Unsecured loans are made based upon a promise to pay, while secured loans require collateral. Upon default of the loan payment in a secured loan, the creditor has a right to repossess any of the items listed as collateral for the loan. In many states, a person filing bankruptcy can remove the lien on the household goods listed as collateral and eliminate the debt.
Be careful about putting up your valued property as collateral. With high interest rates and aggressive collections, you might find yourself scrambling to save your car or personal property. If you're not careful, you can end up deeper in debt than when you started.
Although the monthly payment may be lower, the true cost of the loan is often dramatically increased when the additional costs over the term of the loan are factored in.
The interest rates on personal debt consolidation loans are usually high, especially for people with financial problems. If you have a lot of debt, it can be hard to find a consolidation loan at a lower interest rate. Lenders frequently target people in vulnerable situations with troubled credit by offering what appears to be an easy solution.
Personal debt consolidation loans can be either secured or unsecured. Unsecured loans are made based upon a promise to pay, while secured loans require collateral. Upon default of the loan payment in a secured loan, the creditor has a right to repossess any of the items listed as collateral for the loan. In many states, a person filing bankruptcy can remove the lien on the household goods listed as collateral and eliminate the debt.
Be careful about putting up your valued property as collateral. With high interest rates and aggressive collections, you might find yourself scrambling to save your car or personal property. If you're not careful, you can end up deeper in debt than when you started.
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