Best Way to Consolidate Debt

If considering a debt consolidation, there are several options available. Excessive debt has become a major cause for crisis. And due to modifications in the bankruptcy laws, it had made debt problem tough to fix. As a result, many people are choosing debt consolidation as a suitable option. Fortunately, there are many ways to consolidate debt. These days there are a lot of different ways for individuals to get themselves out of debt. But which way to choose depends solely upon an individual's situation and on amount of debts and the income he as to resolve it. Following are different ways which you can use to consolidate your debts.


Apply for Debt Settlement Plan

Using a credit card can be a good way to get yourself out of debt if you have a good credit rating. If you have a good credit rating you could get a much lower rate then you would get from other types of loans. Since a credit card does not require you to have collateral up front, you are not risking too much by using this method. If you have credit card debt, you should call up potential new card companies and find out how much it would run to you transfer your current outstanding balance over to theirs along with what rates of interest you would receive. If you can get a fixed rate of interest you will be well off and be sure that they will waive any wire transfer fees from you if you go about this. If you are unable to get yourself a low rate of interest with your current credit card company try others, but be careful because too many different types of applications to credit institutions can have a negative impact on your credit profile. When you do consolidate this way, you should be certain to set up the best possible payment plan for it.


When you use a home equity loan you are able to borrow against the value of your home without any other mortgages. There are a couple of different types of home equity loans which are the standard home equity loan. You can get a fixed amount of finances for a fixed period of time and a home equity line of credit where you are able to borrow against the value of your home. These loans can offer you a low rate and low payments; the interested is also tax deductible if you go about it the correct way.

There is also the cash out refinancing option when you refinance your home. This allows you to take out money to pay off some bills and is just another way of being able to tap into the equity that you have retained on your home. If you are able to refinance at a lower rate you can in turn reduce or just all together remove the higher interest costs that you have on the debts that you are paying off and you could even come out with an even lower payment than you have right now since the rates are so low at this moment. Another option to consider is an interest only loan in that you can lower you monthly payments to free up some cash in order to pay down the debt you have accrued elsewhere. Be certain that you understand how much the cost of refinancing is, that way you can take any money that you free up and apply it to pay down other debt that you may have and save the rest for a rainy day.

Loan to Consolidate All Your Debt

The typical debt consolidation loan is a type of unsecured personal loan where the only collateral that you have to offer the lender is yourself. Since lenders consider these loans to be fairly risky in nature they tend to be a bit expensive then the other options and are not the easiest things to get yourself if you acquire a fair amount of debt and not so good score. But you can consider it if you have a good score as it can get a lower interest rate. In addition to that it will also improve your credit score as subsequent payments are made to pay off the new loan. So if the term is adequate then you could actually save some good cash when all is said and done so be sure to calculate how much everything will cost you before you take any action.

Another way is credit counseling which can help you get out of debt even though they do not physically consolidate all of your debt. Instead of consolidation, they will set up payment plans for you to lower your interest rates on your current debts. You will make a single lump sum payment each month to the service and they in turn will pay off all of your current creditors. Going about this sort of service will not usually hurt your credit so long as you pay on time each month but as soon as you pay off it will raise. If you stick with it you can be debt free within three to five years.

The debt settlement option is becoming a lot more popular with people that have a lot of debt and are considering bankruptcy. You would have to stop paying your bills so that they default and as a result a debt settlement company would negotiate a a lower lump sum payment to pay your creditors off with. Instead of them getting nothing by risking you going bankrupt, they allow you to pay off this lower balance so that they can be sure that they get something out of it. As a result you end up paying fifty percent or even sometimes lower, of your outstanding balance to them. Using one of these programs can get you out of debt within two years if you stick to it. It is not a perfect solution as your credit rating will suffer during the short run but this can be easily fixed in the future when you have climbed out of the debt that you are in now.


Consolidation of your debts is not always the easiest thing to accomplish. In reality, if you happen to have a lot of debts, it can be pretty difficult to find yourself a debt consolidation loan at a fairly low interest rate, and if you are not careful you could end up getting even further and further in debt than when you had originally started. The goal of getting your debt consolidated should be to lower the overall costs of your outstanding debt. There a couple of things to keep in mind when trying to do this which involve getting the lowest possible interest rate you can on your loans, and make sure that you have a plan in place to get your debts paid off within three to five years time.

The biggest mistake that a lot of people make when trying to consolidate their debts is not to have a solid plan for paying off the debt after they have consolidated all of their debt and never take action. If you wait for the perfect solution to come along you will just get yourself into a lot more debt trouble. It is very important to get your debt solution going immediately if you want to have the future of your finances looking bright. Explore your options before deciding to do anything. It will be worth it when you are able to get the high priced item you need in the future.



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Unsecured Debt ConsolidationUnsecured Debt Consolidation?

Unsecured debt is debt where your creditor does not hold any collateral that they can seize if you fail to pay. Examples of unsecured debt can include:

 

Benefits


  • Free Enrollment
  • Lower credit card interest rates
  • Reduce monthly payments
  • Get out of debt faster
  • Eliminate late and over limit fees
  • Stop collection calls
  • Consolidate your payments
  • Save thousands in interest!!!!

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Testimonials

I would like to say thanks to everybody that can help with this, I would really appreciate their effort they have done to consolidate my bills. Thanks again..

- James Wolff, MS