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Did you do what many people did and seriously overspent on this past Christmas? Are you dreading those credit card statements that will soon be rolling in. If so, you might want to turn to debt relief consolidation for help. Debt consolidation has helped many Americans and it could likely help you. Here are five tips for finding good debt relief consolidation.
Get a debt consolidation loan
One good way to achieve debt relief consolidation is to get a loan and pay off all your debts. The benefits of a debt consolidation loan are that you would have only one payment to make a month, which will be easier to keep track of than the multiple payments you’re now making. And that one payment should be less than the total of your current payments. If you own your home, you might be able to do a refi or a second mortgage and use the money to pay off your debts. However, if you don’t own your home and have more than $10,000 in unsecured debts, you may find it hard to get a debt consolidation loan.
Transfer your balances
If you have multiple credit cards, get out your statements and check the interest rate on each. Chances are that it’s 18%, 20% or even higher. If this is the case, you should look for a card with a cheaper rate and transfer all your balances to it. Many of the credit card companies are now offering credit cards with interest rates as low as 12%. If you were to transfer the balances on your high interest credit cards to one with an interest rate of 12%, you should have a much lower monthly payment. Plus, you’d have just the one payment to keep track of.
Settle your unsecured debts
Unsecured debts are those where there’s no collateral involved – such as credit card debts. In comparison, your auto loan would be a secured debt as it is secured by an asset – your automobile.. You might be able to settle your unsecured debts by offering to pay them off in lump sums but for much less than you owe. Many Americans have saved thousands of dollars with debt settlement. However, to do this, you would need to stop making payments on those debts probably for six months or longer and you would have to have the cash available to pay the settlements.
Tap your retirement fund
If you have a 401(k) plan, you can probably borrow from it. Most employers will allow you to borrow up to $50,000 or half of what you have in your plan, whichever is less. As a general rule, you would have five years to pay back the money. If you don’t have a 401(k) plan but an IRA, you should be able to borrow from it as well. The best part of tapping into your 401(k) plan or IRA is that your borrowing from yourself and the interest you will be required to pay just adds to your retirement fund. However, there is a downside to borrowing from a 401(k). It’s what happens if you lose your job as you would be required to pay back the money in six months, which could be a real hardship.
Sign up for credit counseling
Consumer credit counseling is another good way to achieve debt relief consolidation. There is probably a credit-counseling agency in your area and if not, you could easily find one on the Internet. Credit counseling is a form of debt consolidation in that once you have a payment plan that all your creditors approve, you would no longer pay them. Instead, you would send a check each month to the credit-counseling agency until you complete the plan it has helped you develop. It generally takes about five years to complete one of these plans and become debt free.
