Consolidate Your Debt For Free

You have reached a stage of frustration and are finding it difficult to live under the burden of debt. Why not get out of it through debt consolidation? That is cumbersome and involves dealing with yet another agency. So why not do it yourself?

Yes, you can provided you have a plan and through this, you can put aside much needed money through reduced interest and come out free from debt.

Here are some tips to go about it:

1) Commit to yourself that there will be no further debt and get rid of the cards to start with. No cards mean no indiscriminate expenses and no unnecessary debt.
2) Make a list of all debt in an excel sheet and it should have the following:

a) Name of the lender
b) Current principal liability
c) The minimum payment due
d) The rate of interest
e) Contact numbers
f) Email and website

If you have any credit open, make a mention of that also. It will come in handy.

3) The next step is to commence checking with each of the card companies about their balance transfer offers. Make sure to tell them that you would shift the account if you happen to get a good offer.

4) Make sure that you maintain notes of any offer on the excel sheet and also check for any hidden clauses. Ensure that you verify delayed payment charges and the tenure of the low interest rates.
5) You need to be alert about a popular marketing plan to entice members with a low rate for the transferred balance with a commitment for a minimum amount every billing cycle. Any outstanding on this is charged at a higher rate, which is fine on the face of it but can be costly if you do not pay off your transferred balance. This is because the card company will levy the lower interest rate first on the transferred balance and not on the other one. This will continue till the balance is settled.

Now you need to choose the best offer and transfer all balances to this card. If you fall short, do not hesitate to ask for an increase in the credit limit. If that is also not provided, take the next best offer.

Make a note of when the special offer ends so that you are able to clear your balance transfers. This way you will not have more than 2 cards and will be able to manage your finances far better.

Most finance advisors would be of the opinion that you need to close the non functional accounts, but it is better to keep them for any major exigency that you might face in future. Just have the discipline to not use them. This way your credit rating will not suffer and you have the option of falling back on these accounts. This advice comes with a caveat that if you are unsure of your spending discipline, then you need to close them with immediate effect.

Do not make the mistake of mixing up the credit card debt with real estate collateral. Failure to pay will risk your house getting repossessed.

Follow the above steps and be your own master finance advisor.

Debt Consolidation and Bankruptcy

When faced with a crisis, it is easy to throw in the towel and run away. The true test of character comes when you withstand the hardship and seek to resolve the issues rather than taking an escapist approach. Similarly, mounting debt and other burdens may be sapping you mentally, but instead of opting for bankruptcy and trying to be escapist, you must look for other options that can get you out of the mess.

This is important because what appears as a solution to your problems may be worse than the problem, in this case filing for bankruptcy will come back to haunt you in the future through bad credit rating and the fact that no creditor will advance any loan for the next 2 years is another negative. Hence bankruptcy should be the very last option and you must actively look at everything else to arrive at a solution.

Debt Consolidation Agency

That solution could be in the form of a debt consolidation body that can help you decrease your burden and get you out of the bankruptcy mode. The agency will allot you a counselor who has many years of experience in dealing with creditors. He will first discuss with you and get an idea of your assets and liabilities apart from details of your occupation. You will be required to submit proofs to support these facts.

He will now suggest a program which would be tailored to take care of your debt and if suitable to you would set up a meeting with your creditors to work out the new repayment schedule. The debt consolidation person will be able to reduce the interest rate as well as the monthly payment through extending the payment tenure. In some cases, borrowers have benefited by up to 70%.

Debt Repayment

After getting the creditors sanction on the new repayment schedule, you will be required to adhere to the schedule. This is a function of the terms the counselor has been able to negotiate with the creditors. Sometimes you may be required to make an application for a loan and this would be used to clear the existing debt. In future, you only need to start repaying this loan. You may also get this facility from the agency itself and they would then start collecting this repayment on a monthly basis from you. Your single point of contact will henceforth be the agency. You must however take care that you do not default on any payment that is due every month.

As you can see, all is not lost and you need not consider bankruptcy when you have an option like debt consolidation at your behest. It will certainly help you come out of the problem and is a far better option than filing for bankruptcy.

Online Debt Consolidation

A lot of people are fighting a daily battle to make ends meet. Some of them are under the mistaken belief that they are good at finance management and will be able to comfortably meet the growing expenditure. They do not realize that very often earning has not kept pace with the ever increasing expenses till it is too late to do much about it. Increasing and easy disposal incomes, easy access to cheap money through low interest rates, global consumerism and irresponsible usage of plastic money due to the fact that one can use the credit card for almost everything has led to debt getting piled up. They find it difficult to settle bills and this puts them under tremendous stress. A possible solution could be debt consolidation which may provide relief from all the anxiety and harsh calls from the creditors.

This option enables the facility to merge several payments into one entity at an interest rate far lower which results in the monthly repayment getting slashed. Since only a single payment is to be made on a monthly basis, the finance management becomes easy and with only one creditor to manage, one can be liberated from the irritating phone calls and mails,

Those not adept at handling their money prudently, fall into the trap of high debt caused mainly due to inability to service current debt, delayed payment levies. They need to become aware that they have a problem at hand at the earliest. Debt compounds an existing problem when you borrow and you are unable to repay it on time. This leads to the interest amount piling up in tandem with the principal. Faced with such a dilemma, it is better to consult a finance expert. This expert can guide one to initiate a debt management plan at the earliest which can result in savings as well as improvement in the credit rating. A weak credit rating could severely impact your chances of borrowing in future.

A debt consolidation program has two components:

a) Methodology to get out of debt.
b) Encouragement through the ease of repaying to one creditor.

Since this single monthly repayment to one creditor is much lesser than the multiple payments one would have made to the original creditors, the money saved enables one to make a greater contribution to the principal of the original debt rather than continuing to pay interest. A debt consolidation plan therefore assists one to get freedom from debt sooner.

Debt consolidation home loans enables one to offer one’s house as strong collateral and get higher loan amounts as well as lower rate of interest since the collateral is a secured one. The rates are higher on an unsecured one where there is no collateral.

Mortgage Debt Consolidation

Carrying a debt burden is extremely worrying and cause for tension. Most of us wish to become debt free and are in a constant race to earn enough so that this is achieved. This challenge can be overcome through a financial instrument called the debt consolidation mortgage loan program. You can qualify for such a program if you own a house.

How does this work?

House owners can merge their debt burden by offering their house as collateral against which you get a lump sum amount. You can use this amount to payoff the long pending card balances, car debt, other personal debt. The moment the credit balance runs out, you need to make the monthly contribution as repayment for the loan consolidation amount.

The benefit is that the rate of interest under this arrangement is very low and many people are able to settle the loan and keep to their schedule. Normally, the tenure is spread over a period of six to sixteen years. Due to low interest rate, you tend to save on the monthly payments and depositing these savings back into repayment can enable you to settle the loan quicker.

Under the loan consolidation program, you can opt for either mortgage refinancing or opt for house equity loan. In the former, you can choose for cash-out mortgage refinance where you can refinance your house at far lower interest rates thus effectively reducing your home loan payment or opt for a cash-out refinance plan where you can borrow against the equity of the real estate you own and utilize that amount to settle the high interest debt. You must be aware though that in doing so, you will be increasing your mortgage payment.

Under the house equity loan program, you have two options – a line of credit against your home equity and simple loans given against your home.

In the first option, you can procure cash to merge your loans and settle them. The amount you get is related to the equity of the house and since this falls under the secured category, even people with weaker credit rating can get their loans sanctioned.

The second option involves the disbursement of a block amount that can be used to settle high interest cost personal and card debts. The credit line extended is of a revolving nature and needs to be settled before it spins out of control.

You can thus utilize your real estate equity to good effect by leveraging the benefit of lower interest rates to settle high interest debt and this enables you to ease your debt burden to a great extent.

Small Business Debt Consolidation

Modern cost pressures and inflationary trends have taken their toll on the commercial viability of various businesses and many entrepreneurs are finding it difficult to keep pace with mounting expenses and remain profitable.

This led to close to 2 million businesses filing insolvency in the year 2006. The repercussions are that the credit rating takes a huge beating and customers and even vendors tend to lose trust. Recovering from such a debacle is very difficult if not impossible. The advice therefore is not to file insolvency and look for other avenues to restore credibility. Many financial instruments are available which can mitigate the debt problem. One needs to know about these options and exercise them. More importantly, it is also necessary to learn from the experience to avoid repetition in future.

The finance market does offer innovative small business debt consolidation options tailored for small business entrepreneurs, who help them, overcome crisis and also provides valuable inputs to prevent any recurrence. Relief is offered in the form of consolidating the loans into one where the interest rate is lower and management of the debt through one liability is easier. The payout on a monthly basis is far lower and is not daunting. The various loans that qualify in this category are loans on the card, apprentice loans, etc. Businesses can consider a variety of small business debt consolidation programs which can assist them manage their debt efficiently and not force them to file for bankruptcy.

The crux of the issue is to achieve relief from the high interest rate at the earliest. Two options, such as the secured and unsecured loans are on offer. The former is lent at a lower interest rate due to the collateral that backs the loan as opposed to the latter, which does not have any collateral backing it and hence comes with a higher interest rate component. It is recommended that you place real estate as collateral as it is always has a value you can fall back on in times of emergency.

The other option is to choose a debt relief schedule wherein the burden is consolidated and repaid over a period of time. This ensures that the debt is spread across a tenure and since the monthly payment is a far lesser amount than what you would have otherwise paid, you have surplus funds that can be utilized effectively.

One must recognize that these options are not a total fix it solution to your debt problems. It only provides you some temporary relief and lessens the repayment burden to some extent. Debt that has been accumulated has to be settled one day and there is no escape.