Debt consolidation is one of the great ways for many people who want to manage their debts easily. If you do not know what you are getting into, it can turn into a disaster. That is why, before involving yourself in the process of debt consolidation, it is good to do your thorough research or take advice from financial advisors to make a proper financial plan. To shed some light on the subject, this blog covers some helpful debt consolidation information you need to know about. Let’s take a look.
1. Check Your Credit Report
The first thing you have to do when planning for debt consolidation is to get your credit history into shape. Figure out your situation and make regular payments of your credit cards and loans to bring it on track. This will help you make sure that you have paid your debts and moving on the right path.
2. Go for a Better Business Bureau or Professional Advisor
When considering consolidating your debts, always keep in mind that every company whether it is a non-profit organization of any financial firm charge substantial fees to offer their service. You may also find many debt consolidators or lenders who hide behind a nonprofit criterion but later on give you a long list of their service charges. It is, therefore, advisable to do your research before joining hands with any business bureau or financial planner instead of regretting on your decision later on.
3. Ask Your Friends For Help To Pay off Your Debts
Let your close friends and relatives know that you are in debt. This will help you in borrowing some money or some useful advice on how to get out of the current situation. If you are burdened with heavy debts, you should not hide this fact from friends and family members as their support can make a big difference.
4. Find Out the Debt that Can’t be Consolidated
Although most debts can be consolidated, there are a few that cannot, such as student loans. So, it is your primary responsibility to find out which debts can’t be covered in debt consolidation before you sign up for it with any financial advisor.
5. Never get involved with a Consolidation Company to take Home Equity Loan
If a debt consolidation company is asking you to take "home equity loan" to pay off your debts, simply deny and move on. Your home is the most important thing you have It is, therefore, advisable to not take any such decisions in a hurry.
6. Look for a Debt Consolidating Loan with Low-Interest Rate
When considering a debt consolidation loan, always choose an option with a low and fixed rate of interest. A lower rate will help you afford to pay a simple payment each month; if not then it will become difficult for you to pay off the loan amount. Look for a loan that provides favorable terms and puts you in a much better financial position.
7. Find Creditors who are Ready for 70% Settlement
Some creditors consider your debt as paid off if you pay 70% of the total amount you owe. It is, therefore, a good strategy to contact your creditors and ask if they are interested in this kind of settlement.
8. Set Extra Money Aside for Every Month to Pay Off Your Debt Easily
You should use the process of debt consolidation if it is possible for you to put the maximum amount down to pay off your debts every month. Although it will affect your monthly expenditures it is the only remedy to paying off your debt and bring your financial condition back on track.
9. Consider All Three Types of Debt Consolidation to Pay off Your Debts
There are three types of debt consolidation methods that are considered as best for most debtors. The first is a home equity loan, the second is a credit card, and the last one is a loan from a loved one.
After reading this blog you will understand that there are a lot of things to know about debt consolidation. Without doing your research, you can’t take help even from a financial advisor as it can be a great burden to you. If you too or any of your loved ones are looking to settle your debts by ethical means, be sure to use this advice when dealing with this venture.