December 18, 2017

What is Debt Consolidation?

Can debt consolidation help rid you of bad debt, safely? Home loan, car loan, student loan, credit cards, store credit, medical bills—all are common examples of high-dollar debt that the average American could have. Credit cards are some of the worst, usually bundled with inflexible repayment terms, penalties, fees and high interest rates that could have you hog-tied to your fat-cat credit card company for years.

If you owe money, you have debt. Millions of Americans, as many as a quarter, are in financial debt up to their eyeballs. When the going gets tough, debt consolidation products and services “promise” to fix your debt problems. Can they really make your debt more manageable?

Debt Consolidation: What It Is Not

At first glance it seems that debt consolidation products simply roll your loans or lines of credit into one neat product—a personal loan or home equity loan.  Voila! Done. Advertisements often give the impression that your debt may be reduced, or that you magically are relieved of much of your debt.

This simplification can lead to common and dangerous misconceptions about debt consolidation.

Technically, a debt consolidation loan replaces your other loans. The lender, be it a bank, a credit card company, or other type of financial company, pays off your loans and then writes you a new one. Your debt doesn’t disappear; it just gets moved around a bit. This new loan is then bundled with its own terms: fees, repayment term, interest rate, and more.

Dangers of Debt Consolidation

Debt consolidation is attractive to many people and for good reason. The common misconception is that a debt consolidation loan will wipe out or vastly reduce, the amount of money you owe to lenders. Guess what? Not true.

  • Debt consolidation will not reduce the money you owe.
  • Debt consolidation will not “get rid” of your debts.
  • It will not solve your poor spending habits.
  • Debt consolidation can cost you exponentially more in the long-term than the total original value of your loans.

At best, debt consolidation can:

  • Reduce the number of monthly payments you make each month. This doesn’t mean you’ll owe less.
  • Help reduce the amount of money you pay out each month. This also doesn’t mean you’ll owe less.

A debt consolidation product is good for lightening the load each month, but in turn you will end up paying out more, owing more, once all is said and done for your debt consolidation loan.

Solving Your Spending Issues

The risks? That debt consolidation only enables you to continue spending, racking up another mountain of debt. Most financial advisors suggest that if you must resort to a debt consolidation product or strategy, choose your lender wisely and use the product to your advantage. Consult a financial specialist for help reigning in your finances and getting your debt repaid for good.

Debt Consolidation Loans: Using Them to Get Out of Debt

If you’re knee-deep in debt then it’s likely you’ve heard the advertisements for debt consolidation loans—those slick pitches that promise to solve all your financial problems, wipe away debt forever, so you can live happily ever after. Despite the fact that many people use debt consolidation loans as springboards to deeper debt, is it possible to gain some advantage if you’re aware of the pitfalls?

Types of Debt Consolidation Loans

A debt consolidation loan can come in various flavors. You might hear it called a home equity loan, a mortgage refinance loan, personal loan, consolidation loan, and might originate with a bank, a credit card company, or another type of financial lending company.

  • Home Equity Debt Consolidation Loan: Using your home as a vehicle for debt consolidation is risky. A home equity loan is a loan made against the value of what you’ve already paid on your home loan. And it’s understandably an attractive option. But your home literally becomes your collateral—the bank may seize it if you fail to make good on your debt.
  • Personal Consolidation Loan: Credit card companies and banks may offer personal consolidation loans. The terms of these types of consolidations is based on your credit rating, or your financial risk to the lender. High interest rates are a risk with these types of loans.

How a Consolidation Loan Works

How does a debt consolidation loan work? A lender pays off your loans and writes you a new loan. A common misconception is that a lender somehow rolls your debt or outstanding loans into one convenient and affordable loan. But it’s hardly that simple and can be an expensive option in the long run if you’re not careful.

Using a Debt Consolidation Loan to Get Out of Debt

How should you use a debt consolidation loan to help get out of debt?

  • Talk to a financial advisor before you consolidate anything. Your bank may have an in-house financial professional that you can talk to for free or for a low fee. And your bank may offer alternative solutions in cases of hardship.
  • If you have to resort to debt consolidation loan, explore your bank’s products first. Usually you’ll get better interest rates and certainly a more reputable lender than if you use a credit card company or other source.
  • Make a personal or family budget. It’s imperative that you face facts about your spending habits before you can fix the problem.
  • Downsize your bills and expenses wherever possible, avoiding credit cards at all costs.
  • Consider the debt consolidation loan a springboard to a better, healthier financial life. Pay more than the minimum monthly payments and certainly pay it off as soon as you can.

Common Pitfalls of Debt Consolidation Loans

Before you jump into a debt consolidation loan, make sure you avoid the common dangers:

  • Beware high interest rates
  • Monitor your credit rating and score
  • Know all the terms of the loan: interest rate, fees, the amount you borrowed and estimated final pay-off
  • For more information, visit http://www.loanconsolidation.ed.gov/

Do You Need Debt Consolidation Services To Get Out of Debt?

One of the reason people hesitate when it comes to comes to seeking the assistance of debt consolidation services is because they do not know if they are in enough debt justify the process. The first thing you need to realize is that it never hurts to meet with a debt consultant and discuss your options. The the other thing you need to consider is that if you are thinking about debt consolidation you probably could benefit from their services – you probably do need it.

Many people think that debt consolidation is a magic solution for their financial woes. Somehow they think that when their debts are consolidated the amount they owe will decrease. This is not always the case. You are still going to end up paying the principle of your debt. Sometimes the debt consultant is able to convince your creditors to stop charging interest on what you owe, or they may convince them to wave some of the fees you’ve amassed. All of this helps, but when everything is said and done, you are still going to have quite a bit of debt that will need to be dealt with before you can assume that your financial situation is back on even ground.

The first thing you need to look at is how your monthly payments compare to your monthly income. If your entire salary is going towards paying your debts (not regular bills, but debts that need to be repaid). you definitely need to make some changes. If this is the situation you find yourself in, you need to act as quickly as possible. Your bills are not going to get any easier to pay.

The next thing you need to look at is the type of debt you have. If most of your debt is connected to bank financing, such as a mortgage or car payment, debt consolidation probably is not for you. The type of loans that debt consolidation is most useful for are student loans and loans with a high interest rate, like credit cards.

How are you spending your money every month?. The reason that you never seem to have any money might have less to do with the amount you owe, but rather how you are spending your disposable income. If you are going out to eat several times a week or if you are going on trips, your financial problems probably have less to do with your debt, and more to do with your inability to manage money.

If you do decide that you are a good candidate for debt consolidation you will need to set up an appointment with an adviser so that you can learn about your options. Before scheduling the appointment you want to make sure that the firm you are going to use is legitimate. You also need to find out how much they are going to charge for their services. Even non-profit debt consolidation firms will charge a fee which goes towards covering their overhead.

Once your debts are consolidated, you will want to do everything you can to pay the debt as quickly as possible. The best way to do this is to pay more each month. Even if you can not afford to pay a lot over, every little bit helps. The sooner you get the debt paid off, the sooner you will be able to relax and start to enjoy your life again.

When you are seeking debt consolidation services you also want to consider talking to a financial expert. You and your financial adviser should go over your expenses and discuss what things you can do so that you can use your money responsibly.

Additional resource links: http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre19.shtm

Debt Consolidation Program – An Overview Of How They Work

It is surprising to discover just how many people do not really understand what debt consolidation really is. Many of them seem to have gotten the idea that when they get their debts consolidated, that their debts are simply forgiven. The purpose of a debt consolidation program is not to eliminate your debt, but to make the monthly payments more manageable.

The way most debt consolidation systems are set up is that you work with a financial counselor who takes your entire debt load and combines into one lump sum. You are still expected to make all of your payments, but instead of several small payments every month, you only have to worry about making one large monthly payment. The payment is than divided amongst your creditors.

The thing that you have to remember about debt consolidation is that not it is not the best solution for everyone. You need to carefully consider you financial situation before you look at consolidation programs. People who are dealing with student loans and lots of credit card debt are usually the ones who get the most satisfaction from their consolidation program.

Most financial experts advice against using a consolidation program for a mortgage or car payments. If you are struggling with remember to pay these things and both of your loans have been covered by the same bank, you can meet work the bank’s loan officer and talk to them about what they can do about arranging to have the payments do on the same day.

There are several different type of programs you can use to help consolidate your loans. For some people the best solution is a credit card transfer. The way this works is that you take one credit card (use the one with the lowest interest rate) and use it to pay the outstanding balance on your other credit cards. This particular debt consolidation program only works if you have not maxed out all of your credit cards.

Most people find that they have the most success when they use a program that has been devised by a debt consolidation company. Not only will the company take a look at your finances and help you decide which debts you should combine and which debts you should pay off separately They will also help you create a budget that will help you use your money more effective and achieve the financial security you crave.

Getting financial advice is not the only reason to use a debt consolidation company. One of the advantages to the companies program is that they can sometimes convince your creditors to reduce the amount of interest you owe. The lower interest rate means that you will be able to get out from under the debt sooner.

Even though a debt consolidation program will not erase you current debt load, but it might let you get a little relief Once your debts have been consolidated, it is up to you to make sure that you pay the monthly bill. If at all possible, you should add a few extra dollars to each payment, which will steadily help erode your debt.

Additional information at: http://en.wikipedia.org/wiki/Debt_consolidation

Online Debt Consolidation

Most of us have reached a point when our salary just doesn’t seem to cover our bills. For some of us that feeling is fleeting, and after a while we are able to get caught up on our payments. For others, they never seem to get out of debt, in fact it just seems like they are always sliding deeper and deeper into it. If you are in a position where you are staring at a pile of bills and you do not see any way out, you might want to consider online debt consolidation.

The one good thing about so many people being heavily in debt is that it means there are more and more companies being started that are designed to help them get out of debt and back on their feet financially. Plus knowing that others are struggling to make ends meet helps a person feel less like a failure, which gives them hope that they will find a solution.

Once you have gotten your debts consolidated, you might want to talk to someone about getting a debt consolidation loan. The advantage to this is that you will have your outstanding will not be approved for the loan.

When you seek out help to get your debts consolidated you are hopefully setting the wheels in motion for a few things to happen. The first is that by having your current debts combined, you will only have to worry about making one monthly payment instead of several. The other is that you maybe putting yourself in a position of paying lower interest rates and even having some fees and charges reduced.

It is important to understand that consolidating your debts is not for everyone. Debt consolidation usually works best for debts that either have a a very low interest rate, like student loans. Or debts that are high interest, such as credit cards.

In addition to considering if the type of debts you are dealing with are really good pairs with debt consolidation, you also need to be realistic about how hard you are trying to pay off your current debts. Are you really putting all of your available cash towards paying off your loans, or are you being frivolous with your money.

At this point your goal should be to get out of debt, not to have all sorts of shiny toys and gadgets. You may also want to consider getting a part time job. You can use the earnings from your part time job to pay off your loans faster.  Every little bit that you can contribute extra each month can add up significantly in cutting the amount of interest you will pay during the life of your loan.

Online debt consolidation might not be the answer to all of your financial problems, but it is usually a step in the right direction. At least by looking into getting your debts consolidated you are acknowledging that something needs to be done, and you are taking control of the situation.  Don’t put off your financial well being until tomorrow.  Check out what you can do today to make a difference in your future.

For more information, visit http://www.onucolombia.org/

Non-Profit Debt Consolidation

If you are currently in a position where you debt load feels like way to much to handle, you need to take a deep breath and relax, panicking will not help you. Once you have relaxed you can look at your current situation and try to work out your best options. One option you should definitely consider is contacting a non-profit debt consolidation firm and seeing if there is anyway that they can make your debt load a little more manageable.
Non Profit Debt Consolidation

What you should not do is walk into the first debt consolidation company you come to and immediately sign a contract. Nor should you assume that since the company says that they are non-profit that they are legitimate There are several things you should check out first. This is going to be a company that holds you finances in their hands, you can not afford to be anything but careful.

One of the first things you should do is call the Better Business Bureau. This call serves two purposes. The first thing you are confirming is that the non-profit firm is indeed a registered business. If the BBB does not have any registration for the firm, move on. You also want to ask if there have been any complaints. One or two complaints is nothing too worrisome, however if there are several complaints you should also start looking elsewhere.

When you contact the non-profit firm, you want to ask about their 501 certificate. This certificate is what a business needs in order to claim non-profit status on their federal taxes. If they can not produce the certificate they are a for profit firm.

After confirming that you are in fact dealing with a legitimate non-profit firm, you need to arrange a consultation In addition to going over your current finances, you need to ask the person how much they are going to charge you for consolidating their debt load. It is common for a person to assume that since the business is non-profit that there will not be any fees. Even though the firm is non-profit they do still have to cover their overhead. This means that they can charge you for their services, they just have to make sure that everything they make from the deal goes directly to covering their expenses.

What you should not do is trust the number that the adviser you are dealing with quotes. They should be able to tell you why they are charging you that particular price. Nor should you assume that their price is fair. You should have a list of all the non-profit firms in your immediate areas. You want to get an estimate from each one.

Just because a firm might be cheaper than all the rest, it does not mean you should automatically sign with them. This is a firm that is going to be handling a transaction that could determine your entire financial future You need to be comfortable with the choice you make. Go with the firm that instills you with the most confidence.

If you are seeking the services of a non-profit debt consolidation firm, there are some other things that you should probably consider. The first is seeking the assistance of a financial adviser who can help you plan a budget that will let you pay your bills and still have enough money left over to live on. The other thing you might want to do is get a part time job and using your wages from that to clear your debt sooner.

Learn more, click here: http://parents.berkeley.edu/recommend/legal/creditrepair.html

Are Debt Consolidation Loans Right For You?

Debt is one of those things that does not seem like a big deal, and than the ext thing you know you are drowning under it. All of a sudden it does not seem like you job pays enough and you start looking for a part time job. On possible solution that has the potential to simplify your life are debt consolidation loans.

Many people make the mistake of assuming that when they consolidate their debts, they are making their debt load smaller. This is not strictly the case. While there are times when the debt consolidation company might be able to negotiate with your creditors to get a reduction of interest, you are still going to be required to pay off the principle and a majority of the interest.

One of the things that consolidating your debt does is make it so that instead of making multiple payments on multiple loans being made every single month, you will only have to worry about paying on large payment a month. This payment is than divided amongst your creditors. Once this is done, you and your financial adviser can discuss the possibility of a loan that will pay off the debt.

For many people, a loan that pays their entire consolidated debts load is the answer to all of their problems. Many creditors are happy to discuss a significant reduction in the amount of interest they are owed if they know that they will be getting paid off in a short period of time. Having the interest reduced makes a huge impact on the amount of money you need to borrow. You will still have to repay the loan, but at least you will not have to worry about creditors calling you at all hours of the day and night.

Even though you still are not free of debt, you have to repay the loan, you are not usually in as deep a debt as your were before you paid off your creditors. The reason for this is interest rates. The interest rate on your new loan should be considerably less then the interest rate you were paying before you consolidated and paid off your pre-existing debts.

Taking out a loan to pay off your pre-existing debts is not always a safe choice. Since you are already up to your ears in debt, you are on shaky ground with regards to approval. You are probably going to have to put up some sort of collateral. Usually this collateral is your home. Considering that the credit card companies can not touch your house this might not be the safest option.

It is in your best interest to pay off the loan as quickly as you possibly can. The best way to do this is by adding a little bit extra to each months payment. Even if all you can afford is an extra five dollars a month, it will add up. Also plan on making your monthly payment a minimum of a week in advance. The last thing you need is to have a few payments be late and for you to start amassing late fees.

You want to pay off your debt consolidation loans as quickly as you can. Even if you can only afford to spare $5 a month, you should add it to the monthly payment. All of these little bits of money add up and you will pay off the loan and be debt free sooner versus later.

Learn more, click here: http://www.hcd.ca.gov/

Choosing The Perfect Debt Consolidation Companies For Your Unique Needs

Debt is becoming an huge problem in the United States. By the time a student graduates from college they are in more debt than they can reasonably hope to repay, especially with the economy in a recession. For many of us the only real solution is to contact debt consolidation companies and find out how they can help.
Debt Consolidation Companies

The concept of a company that consolidates debts is very simple. You approach the company and explain your financial situation The company contacts your creditors and negotiates things so that you can make one monthly payment which is spread out to all of your creditors. However, like so many things, the companies are not quite as simple as they appear.

The first thing that complicates things is that the company does not just negotiate to have all of your outstanding bills lumped together into one. The company actually reaches out to your creditors and implores them to lower the amount of credit you owe. In some cases the debt consolidator is such a good negotiator that you hardly have to pay any interest at all.

In addition to reducing the amount of interest rate you will pay on the overall loan, the debt consolidator will also sit down and look at what kind of fees are connected to your account. Theses fees, especially the late fees, add up quickly. Plus the more late fees you have, the more interest the creditors get from you. You debt consolidator might be able to negotiate to have at least some of the late fees forgive.

It is important that realize that the debt consolidator is not helping you out because they are such a nice person. This is their job and they expect to get paid. Even the non-profit companies will charge you something, otherwise they will not be able to cover their costs.

Before you sign anything you need to know exactly how much the company who is consolidating your loans is going to charge you. Do not settle on the first company you talk to. You are going to want to get some estimates on the price of your debt consolidation from at least three companies. Once you have the estimates make sure that you compare the prices.

The amount of money is not the only thing you need to consider when you are getting ready to sign with a company that consolidates debt. You also want to make sure that you are comfortable with the financial adviser you are going to be working with. Paying a little extra is worthwhile when it means you will be dealing with some you like, instead of someone who makes you uncomfortable.

Do not just walk into debt consolidation companies and expect them to tell you everything. Before you even contact a company you need to educate yourself. Spend some time learning as much about debt consolidation as you possibly can. The better informed you are, the easier it will be to know what solution best fits your situation.

Find out more: http://www.schoolwork.org/student-loan-debt-consolidation.html

Getting Out Of Debt With The Help Of Credit Card Consolidation

Credit card bills have a nasty way of sneaking up on you. When you were using your card to make a purchase, it did not seem like you were spending much, but when you get the bill and see how much all of those little purchases add up to, and how much the interest is, you start to wonder how you are ever going to pay it off. The only thing worse than a credit card bill, is getting two or three of them. If you are struggling to pay off your credit card bills, you might want to seriously consider credit card consolidation.

Credit card companies charge a high interest rate because that is how they make money. The credit card companies also want to make sure that you pay that interest rate as quickly as possible,e they take on a substantial late fee whenever you are a single day late with the payment. It usually does not take very long before the interest rates and service fees add up to as much as your actual purchases do.

When you consolidate your credit cards, you are not getting out of paying them. What the consolidation does is change the way you pay. Instead of making two or three payments ever month, you will only need to think about one.

Credit cards are a perfect example of why debt consolidation works. When you combine the cards, you are reducing the chance that you are going to forget a payment which adds an incredible amount of late fees to the total. The fewer chances of you being late with a payment, the better.

One of the biggest advantages to consolidating your various credit cards is that it can sometimes lead to a reduction in the amount of interest you owe. It is not unusual for a debt consolidation company to be able to work with a credit card company and negotiate a significant decrease in their interest The lower the interest rate the debt consolidation company is able to negotiate, the faster you will be able to get the bill paid off and be free of debt.

Since the whole purpose of consolidating your credit card debt is to get them paid off, you need to commit yourself to only living within your means. There is very little point in continuing to use your credit cards. If you can not afford something, you are going to have to go without it until the funds are available. The only time you should reach for your credit card is when you are dealing with a very serious emergency.

The best way to make eliminate the temptation to use your credit card, is by getting rid of it. Save one card for emergencies and cut up the rest. If you do end up purchasing something that requires the use of a credit card number, you should use your checking accounts debt card or a pre-paid credit card.

If you are struggling under a mountain of credit card debt, you should not hesitate to start the consolidation process. Credit card consolidation takes time. The sooner you are able to start the process the better.

Additional resource links: http://en.wikipedia.org/wiki/Debt_consolidation

Is Debt Consolidation Right For You?

It seems like every time you turn on the television or radio there is an advertisement about the many advantages of consolidating your debts. The gist of the advertisement is always the same, if you use the company to consolidate your debts, your life will be better. According to the advertisements, consolidating you debts is the only thing you need to do in order to live a happy life that is free of financial worry. What the advertisements don’t tell you is what debt consolidation really is, or if it is truly the right choice for you?

What consolidating your debts does is take two or more of your current debts, and combines them into one larger loan. Contrary to what the advertisements imply, the consolidation doesn’t necessarily make the loans smaller, what it does is eliminate the hassle of trying to remember which bill needs to get paid when. For some people, having the debts consolidated into one lump payment is the difference between paying the loan on time, or forgetting about it and acquiring a finance charge.

It is important to understand that having their debts consolidated into one large loan is not for everyone. There are some cases where it is a very good idea. There are also some cases where the consolidation actually led to some bigger financial problems.

The consolidation of debts is a very useful solution if you are currently struggling to pay off several high interest debts, such as several different credit card debts. More often than not, having these types of loans consolidated into one, will actually lower the amount of interest you ultimately pay. The other advantage of having credit card loans consolidated is that you will no longer have to worry about racking up huge late fees and service charges because you forgot about a payment for a few days. As long as you make your monthly payment on the consolidated loan, the amount of money you owe will decrease at a steady rate.

One of the reasons some people find that consolidating their debts is not the answer they were hoping for is due to interest rates. There have actually been incidents where the consolidating the loans have increased the amount of interest the person has to pay over time.

Another thing to consider is the type of loans you are hoping to consolidate. Some loans, such as a second mortgage on your home are best if you don’t consolidate. One reason for this is because the consolidation changes the terms of the original loan.

One of the things you may want to consider is a plan that allows you to consolidate some of you loans and leave others unconsolidated. This works especially well if you are able to consolidate similar loans. For example you may consider consolidating your various student loans, and maybe consolidating all of your credit card loans into one lump payment, but leave your car loan and mortgage unconsolidated

For some people debt consolidation is the best possible answer to their financial situation. You are the only person who can determine if the process is a good fit for you. You should also plan on meeting with a financial counselor before making any final decisions.

For more information, click here: http://www.loanconsolidation.ed.gov/