Debt Consolidation: Is This The Right Step For You?
Debt consolidation is what a lot of people need when they’re dealing with a lot of different bills. Are you in this situation? Or perhaps it is someone you may know? If so, make sure you check out this article and learn more about the debt consolidation process.
Before starting any debt consolidation program study your credit report. You need to understand what happened to get you into this mess. This ensures you don’t take the same destructive path after you have eliminated your debt.
When you are looking into debt consolidation options, don’t assume that a company advertised as non-profit is completely worthy of your trust or that they won’t be charging you a lot. That term is frequently used by predatory lenders that want to give you bad loan terms. Go to a company recommended by a friend, family member or the Better Business Bureau.
Make sure the counselors working for a debt consolidation service have the proper qualifications. Find out if an organization that certifies debt counselors has approved this organization. Are they backed by well-known entities? This is a great way to figure out whether the company you are considering is worth your time.
A label of “non-profit” does not necessarily make for a great debt consolidation company. Do not assume that a non-profit automatically means reliable. It is a good idea to check with your Better Business Bureau to find out their ratings and reputation.
Think about bankruptcy as an option. Bankruptcies of all types have a negative impact on your credit rating. However, if you are missing payments and unable to pay off your debt, your credit may already be bad. Bankruptcy could let you start over.
Never borrow money from someone you’re unfamiliar with. When you’re in a bad spot – that is when the loan sharks pounce. Choose a lender who is reputable, trustworthy and comes highly recommended.
Debt consolidation companies offer help; however, there are certain companies that prey on debtors. If something seems too good to be true, it probably is. Make sure to ask tons of questions of your lender and get answers prior to entering into any agreements.
Find out whether you can use a small amount of money from your retirement fund to get a grip on your credit cards that have high interest rates. You’ll need to repay the money to your retirement account though, so make sure you take that into consideration first. If you are not able to repay the amount, taxes and a penalty will be required.
Make certain counselors of the debt consolidation company you are considering are certified. Consult the NFCC to find companies that use certified counselors. That way, you can be more secure that you are doing the right thing and dealing with the right people.
Grow accustomed to buying things with cash once you have consolidated. You never want to start the credit card cycle again. This can result in breaking a bad credit habit. Using cash will give you a greater control over your spending.
You can borrow money from a friend or family member in order to consolidate your debts. This is risky, but it can improve your chances of paying off your debt. This is the last opportunity to pay off debt, so do it only if you can pay it back.
It should now be clear that debt consolidation can be a great way to help you out of debt. You can simply get all your bills combined into one easy payment each month. Use the information from this article to get your debt under control and to free your life from financial stress.