Do you only pay the minimum on your debt loans or credit cards? Do you use your credit cards for most of your daily expenses and carry a balance from one month to the next? If you said yes to either question, you should probably look at your finances more closely because it's likely that you have more debt than you should. You have choices, which is good. There are a lot of companies that help people consolidate their debt for free, and some banks now also offer consolidation loans. The benefits will be a small monthly payment, lower interest rates, and getting one step closer to being debt-free. Your consolidation consultant will also help stop creditors from bothering you and work with them on your behalf.
Once you contact a credit consolidation service, the person helping you will look at your situation based on what you tell them, your credit history, and how much you can pay each month. The consultant will figure out the best way for you to pay off your debts as quickly as possible. Credit cards, personal loans, medical bills, gas cards, auto loans, department store cards, and back taxes are some of the most common loans and bills that people want to combine. Depending on your situation, you can combine all or some of these loans into a single loan and make just one monthly payment instead of several. Review your outstanding debt and figure out how long it will take you to pay it off without consolidating, as well as how much you will spend just on interest. Then, compare your numbers to how you would pay back your loan if you did get one.
Companies that help you consolidate your debt work with your creditors to come up with terms that are good for both you and your creditors. Most creditors are willing to work with debt consolidators because they'd rather get paid back at a lower interest rate than not at all. Still, you should know that a debt consolidation loan is a secured loan, like a second mortgage. When you consolidate, your unsecured debt, like credit cards, will turn into secured debt. If you filed for bankruptcy after combining your debts, the creditor could take the asset that was used as collateral for the loan.
When you look at your situation and all the details of debt consolidation, you will probably find that it is still in your best interest. You can pay a lower interest rate, less each month, and only one payment instead of several. Each month is easier, and you feel like you have more control over your money.
