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Debt Consolidation: Is This The Right Step For You?

Are you struggling with debt? Are you overwhelmed by the amount of money you owe to several different lenders? If that’s the case, you may wish to consider debt consolidation. For more information and advice about how this process works, keep reading.

Have a clear payoff goal in mind. Rushing to get the lowest interest rate is not the best and only way to pay off your debts quickly. Consider how you can pay off your monthly debts in approximately 3 to 5 years. This helps you get out of debt and raises your credit score.

To pay off your debt, try borrowing money from friends or family. This is a great way to save interest. That said, there may be several problems like possibly damaged relationships, expecting returned favors in the distant future despite paying it all back, and possible legal action from a family member or former good friend. Exercise caution when using this suggestion, and make sure to pay it all back in a timely fashion.

Debt consolidation works best when applied to credit cards. If you have significant balances on various cards, you’re probably paying way too much in interest and could benefit greatly from a debt consolidation loan. See if you can’t combine all of the debt into one payment with a favorable interest rate, and limit your credit card spending once that is accomplished.

Avoid choosing a debt consolidation company only because they are non-profit. For example, a company saying that it is a non-profit agency is not necessarily good. You can easily check to see if the company is reputable by contacting the BBB, which stands for Better Business Bureau.

If you have life insurance, you may be able to borrow money from the policy to help pay for your debts. The money borrowed is taken from the amount your beneficiaries will receive upon your debt. Many borrowers pay this money back so that their funeral expenses are covered.

Think about filing for bankruptcy. Bankruptcy does negatively affect your credit. That said, if you can’t pay off a consolidated loan, you’ll end up with bad credit anyway. Filing for bankruptcy lets you reduce debt and financially recover.

When you are consolidating debt, you must try to renegotiate with your creditors. Whether you are choosing to try and do this yourself first or have enlisted the help of a debt consolidation company, renegotiation is key to saving you a lot of money when paying off your debt.

Consider asking your family for a debt consolidation loan. If you are reliable and have a family with means, this can be the cheapest route to debt consolidation. They pay off the debt, and you pay them at an interest rate that is more favorable then a bank would offer in a savings plan. It can be a big win for all involved.

Among many options for how to tackle your debt, which one is best for you? If you’ve determined that debt consolidation will work for you, use what you’ve just learned as you go about the process. Many people have been able to end their debt and feel free again with this method, and so can you.