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3 Signs That Consolidating Debt Will Just Waste Your Time

man with credit cardsConsolidating debt is one of the solutions that can effectively solve credit problems. However, you need to understand that it is not necessarily true for everyone. Some people may find out that debt consolidation loans is the best way for them to achieve debt freedom. However, some consumers will not have the same experience.

When selecting a debt solution for your credit situation, you need to be sure that you are using the right program. If not, you may find yourself wasting your time, effort and money on a solution that does not fit your financial situation in the first place.

The truth is, consolidating your debt is logical. Why will you complicate things when you have the option to deal with just one debt instead of multiple ones?

The NewYorkFed.org revealed early this year that the household debt in the country increased by $117 billion towards the end of 2014. That means the total household debt is now at $11.83 trillion. The data revealed that the increase happened in almost all kinds of debt – mortgages ($39 billion), student loans ($31 billion), auto loan ($21 billion) and credit cards ($20 billion).

In most cases, households have all of these credit problems. Mortgages, credit cards and student loans are among the prominent debts in every American family. When you are managing your credit, you need to keep track of all these accounts, due dates, minimum payment requirement, interest rates and other charges. It can all be very confusing at times and if you are not careful with your monitoring, you can end up forgetting payments. That can lead to a late penalty charge and a possible negative effect of your credit score.

If you can relate to this problem, then consolidating debt may have already crossed your mind. But before you finalize your decision to use this debt solution, make sure that it will not waste your time first. Fortunately, there are three signs that will help you realize if this is a solution you can pursue or not.

3 signs that debt consolidation is not the right debt solution

If you need to make sure that consolidating debt is the answer to your credit difficulties, you need to make sure you do not exhibit these three signs.

You need a debt reduction.

Let us make one thing clear: debt consolidation loans do not pay off your debt. It is true that you will use the loan to pay off and close the multiple debts that you owe. But after all of that, you need to remember that you still owe the same amount of money. You simply restructured your debt so it is under one lender. If this is not enough for you, then you need to reconsider a mere consolidation of your debts.

According to an infographic created by TransUnion and published on PressPage.com, the average credit card debt during the first quarter of 2015 is $5,142. That is a huge amount to pay off. If you add to it mortgages, auto loans and student loans, you could very well be drowning in debt at this point. You need to be very honest with yourself about your ability to pay off your debt. Can you afford to pay off your loan or do you need a debt reduction?

You do not have a stable income.

One of the requirements of debt consolidation loans is a stable income. You should not only have a steady income each month – you need to be sure that you will be having it for a couple of years in the future. A benefit of consolidating debt is you can lower your monthly payment requirement. Ideally, the debt consolidation loan that you will get should have a longer payment period so you can stretch your current balance over that time. The result will be a lower payment contribution each month. This longer payment period means you should have the resources to support your contributions. A stable income is the answer to that. If you are earning an irregular income or you only have a temporary job, you need to reconsider if debt consolidation loans is the answer to your problems.

You want to get out of debt fast.

The third and last sign that you need to look out for is your intention to get out of debt fast. If you want a fast relief from your debt, you may want to look elsewhere for your debt solution. Debt consolidation sometimes take a long time to finish. This is especially true if you combined certain debts like your credit cards with your mortgage. A home loan takes more than a decade to complete. If you are retiring soon, you probably want to finish paying off your debts as soon as possible. That way, you will have enough time to save up for your upcoming retirement. According to an article published on Fool.com, four out of ten baby boomers do not have anything saved for retirement. If you are in this situation, you need to get out of debt fast so you can maximize your extra money and add it to your retirement fund.

Apart from these signs, you also have to consider other factors like the type of debts that you owe. Consolidating debt that has a low interest already may not save you money – especially if the loan you will get has a higher interest rate than your existing. Loans with prepayment penalties may also be better off left alone and not consolidated.

Settle debts instead of consolidating them

There are other options to get out of debt if you think that debt consolidation loan is not the right solution. If you need a debt reduction and you want to get out of debt because you know that your income is not stable, then you may want to consider debt settlement instead.

Settling your debts involves an agreement between you and the creditor or lender that will allow you to pay only a portion of your current balance. What you will do is to negotiate so you can pay a settlement amount that is just a percentage of your balance. Once this amount is met, the creditor or lender will forgive whatever is left of your debt. It is like paying your debt pennies for every dollar.

While this debt reduction is very appealing, there are a couple of things that you need to understand about debt settlement.

  • You need to be in a financial crisis. It is important to note that only people who are in a financial crisis can find it easy to settle their debts. No creditor or lender will take notice of your proposal to settle unless your loan is already on default – or you have gone months without paying off your loan. If they know that you can still afford to pay each month, they will not settle with you. But if you can prove that you are in a financial crisis, things will be easier for you.
  • The decision to settle is in the hands of the creditor. Regardless of how strong your proof is that you are in a financial crisis, debt settlement will be completely under the discretion of the creditor or lender. There is no law backing you up here. So if they decide not to grant you a settlement, there is nothing that you can do about it. Your creditors consider your loan payments as part of their profit. If they allow you to pay only a portion of that, they are cutting into their earnings.
  • Debt settlement can ruin your credit score. Since creditors will hardly pay attention to your settlement proposal unless you are on default, you can expect that your credit score will not go unscathed. Regardless if you are successful in negotiating a lower payment or not, you will always end up with a damaged credit score.

The road to debt freedom, whether that is through debt consolidation loan or debt settlement, will always be tough. You need to make sacrifices if you want to eventually have financial freedom. But if you choose the right debt solution, it will be easier and less damaging.

Here is a video that will help you make better decisions about your personal finances.

11 Questions You Absolutely Must Ask Any Debt Settlement Company

A young female business manager behind a computer talks on a mobile phone.

If you’re laboring under a big cloud of debt the idea of getting relief from it probably sounds very good. If you were able to get those debts paid off you could stop worrying about them, quit sweating every time the phone rings because you’re afraid it’s yet another debt collector calling … and get back to having a better, less stressful life.

What exactly is debt relief?

Debt relief is a sort of an umbrella term that covers several different ways to deal with debt including forbearance, debt restructuring and debt settlement.

Forbearance generally means that the lender or lenders forgive your past due interest payments so long as you start making your payments. Debt restructuring is where an existing debt is replaced with a new debt. This usually involves a reduction in your principle or a change in the terms of the debt. For example, you might consolidate your credit card debts into a new personal loan that would be repaid over five or even 10 years. This would allow the same principle (your balance) to be amortized over more time resulting in smaller monthly payments.

Debt settlement

This form of debt relief grew in popularity as a result of the Great Recession that left many people either unemployed or underemployed. The way it works is that you contact with a debt settlement company that then offers lump sum payments to your creditors to settle your debts but for much less than their balances. In fact, good debt settlement companies are usually able to settle unsecured debts such as credit card debts for about fifty cents on the dollar.

Why would lenders ever agree to settle?

Lenders can be persuaded to settle debts when they are made to believe that it’s either that or you will be forced to file for bankruptcy. This comes under the old “half a loaf is better than none” idea. Companies that hold unsecured debts understand that if you file for bankruptcy they will get nothing. This is why most of them will settle.

Questions to ask any debt settlement company

While debt settlement can be an excellent way to get debt relief, it’s important to choose a reputable company. Here are 11 questions to ask any debt settlement company to gauge its honesty and reliability.

How long have you been in this business and how much debt have you settled?stash of cash

Young companies have very little experience in settling debts and may not have settled many at all. The company you chose should have been in business for at least five years and should have settled many millions of dollars in debts.

What do you charge?

The Federal Trade Commission has outlawed upfront fees so if a settlement company tells you that you must pay something upfront, run away. No reputable debt settlement company will charge you any fees until it has settled your debts. Before your sign an agreement with a debt settlement company be sure to ask for a full disclosure of is fees in writing.

Do you pay my creditors monthly?

Honest debt settlement companies do not pay your creditors monthly. As noted above they settle debts in the form of lump sum payments. If the settlement company says that it will be making monthly payments to your creditors, big red flag!

Will this affect my credit report?

The correct answer to this is, “yes.” Debt settlement will impact your credit report and credit score. If a debt settlement company claims anything to the contrary – another big red flag.

When will you settle my first debt?

When the debt settlement company will be able to settle your first debt will depend on your creditors and the amount of money you can save for your settlements. The more time the debt settlement company takes to settle your debts the greater are the chances you will end up getting sued over one of them.

How long will this take and how much will it cost?

It’s really impossible for a debt settlement company to tell you how long it will take to settle your debts. However, under the new rules for debt relief the company should be able to give you an estimated time frame based on the amount of debt you owe and how much you are able to save for your settlements. Most of the leading debt settlement companies operate on a fee basis, which varies from 15% to 25% depending on the size of your debt. Once the settlement company and you reach an agreement as to how much of your debt it will be settling it should be able to give you a very clear idea of what it’s fee will be.

Where is my money while you’re settling my debts?

Your money should be in an escrow account held by a third-party while your debts are being settled. This account should be FDIC insured. You must have control of the account and the ability to close it and get your money back without a penalty at any time. The best debt settlement companies offer a 100% satisfaction guaranty that you can withdraw from your program at any time for any reason and not be charged a single cent.

Are there alternatives to settling my debts?

A reputable debt settlement company will explain to you that there are alternatives available to debt settlement. For example, it will tell you if you would be a good candidate for a debt management plan. It should also not discourage you from talking with a bankruptcy attorney about that option. If the debt settlement company discourages you from looking into other options that’s another big red flag.

When will I hear from you?

Reputable debt settlement companies practice transparency. This means they will keep you in the loop with updates all along the way as to the status of their negotiations with your creditors.

Does debt settlement have tax consequences?

The answer to this is also “yes.” Lenders are required by the IRS to report any settlement of more than $500. However, many lenders simply do not do this. Plus, if you can show the IRS you are insolvent you’ll probably get those taxes waived.

How do you calculate my estimated savings?

Let’s assume for the sake of the example that the debt settlement company says it will save you 50% of your debt. It must base this estimate on the total amount of debt being settled plus any fees or interest that accumulate after you enroll in its program. Plus, they must include the fees that you’ll pay before they calculate your savings. If the debt settlement company doesn’t provide a complete disclosure of the savings it estimates it can get you, tell it so long.

What debt settlement companies may not tell you

Unfortunately, there are some things that the less than reputable settlement companies may not tell you. The following video discusses five of them.

6 Ways To Slash Expenses … Practically Overnight

cutting moneyIf you feel as if you are falling deeper and deeper into a financial hole it doesn’t take a crystal ball to figure out the problem. You’re spending too much money. If you don’t believe us, take out a piece of paper or your eTablet and write down all your spending for the past 30 days. If you have a problem remembering all of them, get out your credit card statements or your checkbook. Next, add everything up and compare it to your earnings. There, see, you’re spending more than you earn. And if you don’t do something about this, your financial problems are only going to get worse. So, what can you do? Here are six ways you could slash your spending.

Consolidate your debts

When you analyze your finances do you find you have multiple debts– especially credit card debts? If this is the case you should consolidate them so that you’ll have just one payment to make a month that should be much lower than the sum of the payments you’re currently making. One way to do this is with a debt consolidation loan. If you can qualify for an unsecured loan, meaning that you don’t have to offer any asset as collateral, you should have a much lower interest rate than those on your credit cards as well as a lower monthly payment. This will simplify your financial life because you’ll need to make only one payment a month instead of the multiple payments you’re now making. If you’re unable to get an unsecured loan you might try for a balance transfer where you transfer the balances on your high interest credit cards to one with a lower interest rate. You might be able to get one of those 0% interest balance transfer cards and pay no interest for anywhere from 12 to 18 months, which could shrink your monthly payment dramatically. There is also consumer credit counseling where a debt counselor would help you develop a debt management plan designed to get your finances back on track. While not all these options are for everyone there are circumstances where at least one of them could help.

House with cash on the roofRefinance your home

If you haven’t checked the interest rate on your mortgage recently, now might be a good time to do so. Mortgage interest rates are at nearly all time lows. Refinancing is where you get a new loan with new terms. This will change the length of your loan as you’ll be resetting it back to zero but this should help you get a better interest rate, which will mean a lower monthly payment. Go online to a refinance calculator and compare what your current mortgage monthly payments are vs. what a new, refinanced monthly payment would be to see how much you could save. You might be surprised at the difference. We know of people that have saved $300 or more a month by refinancing. However, it’s important to remember that in order to get a good interest rate you need to have a good credit score. You can get yours on sites such as CreditKarma.com, CreditSesame.com and www.myfico.com. Credit scores typically range from 300 to 850. If you want to get the best possible interest rate when you refinance, you will probably need to have a score of 750 or above.

Get green

Energy costs can be especially a problem these days as costs continue to increase as do the number of electronic devices we have in our homes. This can make it a good idea to take some environmentally friendly actions to slash you expenses and do something nice for mother Earth. You can get especially good savings by changing to energy efficient solutions such as compact florescent lights, timers, power strips and programmable thermostats. You should also consider air sealing your house – especially if it’s an older one– and do unplug your devices when they are not in use.

Revisit your insurance premiums

There’s no question but that you need insurance to protect yourself against the unexpected but there’s no reason to overpay for it. This can leave you vulnerable in another way and that’s to financial problems. If you haven’t shopped around for your homeowner’s, health, auto and life insurance recently you need to do so. Websites such as Esurance, NerdWallet, Selectquote and Intelliquote make it easy to compare insurance premiums from many different insurers. It’s just good to check your insurance options from time to time to make sure you’re getting the coverage you need at the best possible price.

Quit eating out

Ordering in or eating out can seem like a real timesaver. However, the cost of this is far from minimal. You could cut your food bill by cooking your meals at home and by packing lunches to work. If you would like to cut your spending even more, make meals in bulk and then freeze them for future use. You will also spend significantly less money if you buy store-brand or generic products in place of name brand items. And, of course, you could save even more if you start a garden and grow your own fruits and vegetables.

Smiling young male with tie posing next to his carBuy used

Thrift shopping can help you slash expenses by thousands of dollars a year. Vintage clothing, cell phones, furniture, computers, kitchen appliances – just about everything you can name can be purchased second hand on sites such as Craigslist, eBay and Etsy. There are probably second-hand stores near where you live as well as thrift stores run by nonprofit organizations like ARC (Association for Retarded Citizens) and Goodwill. Before you turn up your nose at the idea of shopping in a thrift store, go check one out. You might be surprised at the items you find and their prices. Sometimes people just need to get rid of stuff that’s in good shape because they’re downsizing, no longer have room for it and choose to donate it. We know of one young man that essentially furnished his living room out of a Goodwill Store and the furniture was in such good shape you’d never know where it came from.

Another area where you should definitely buy used is an automobile. You may have heard that a new car loses a chunk of its value the minute you drive it off the dealer’s lot and it’s true. In fact, the website Trusted Choice estimates that it drops 11% in value. This means if you buy a new car for $31,252 it’s worth only $27,814 the minute you get home. One year later, thanks to depreciation, it will be worth $23,523 and two years later that $31,22 car will be worth just $16,867. Now, for the good news. If you were to buy that car when it’s two years old and pay just $16,867, you’ll have saved $14,385 and will be driving a really great car that once sold for more than $31,000! To put this another way, that other guy’s loss is now your gain.

Buying used cars makes even more sense today thanks to leasing. You’ve undoubtedly seen those ads where new cars can be leased for $225 a month or even less. Where do you suppose those cars go when their leases are up? They go to auto auctions where used car dealers buy and resell them. If you shop carefully, you should be able to pick up one of these cars at a real bargain and drive home with one that’s only a couple of years old and is fully loaded.

How To Keep Control Of Your Medical Debt

medical debtAre you one of the roughly 40 million Americans wallowing in medical debt? As the cost of healthcare continues to increase almost geometrically so do medical debts. In fact these now account for 52% of collection accounts on credit reports. This is far ahead of all other types of debt including even credit card debt.

While it’s possible to plan how much you will spend on a car or a house it’s virtually impossible to plan on how much you’ll spend on an illness or because of an injury. Of course, at the time you receive care the last thing on your mind is how much it will cost you. You might find it easy to haggle with a car salesman but are you going to haggle with a surgeon over the cost of repairing a heart valve are removing a tumor? You might not want to go this far in keeping control of your medical debt but here are ways you can at least keep it in check.

Carefully review all medical bills

If you review a bill and don’t recognize one of the providers, write down the date of service and then check to see if you had any kind of medical treatment that day. If you had a more complicated procedure, get an itemized bill from the provider so that you can see what the charge was for each service you received.

Keep all bills and documents organized

If you find one you need to dispute, write to the provider, and include a copy of all relevant documents. This could be records from your doctors’ offices or credit card statements. Make sure they are copies; do not send original documents.

Be sure your providers have your correct insurance information

If you don’t know exactly what your insurance covers and what it doesn’t, you need to review your policy to determine this. Also, make sure that your insurance information is accurate and up-to-date. If your providers don’t have your correct insurance information there could be a small mix-up leading to big bills for expenses that should have been covered by your insurance.

Act fast

When you receive a bill, you need to first verify whether your insurance company is paying for all or part of it. If you believe an error has been made and you don’t think you really owe the bill you need to act quickly to dispute it. If you don’t pay it or dispute it the bill can end up at a collection agency and this is something you definitely don’t want to happen.

Try negotiating

There is always the possibility that the hospital will negotiate with you. For example, you might be able to get the tab reduced if you pay the whole amount up front. You could also ask the hospital for the same rate that’s charged people with insurance. Or it’s possible you could get the hospital to let you pay off your debt in installments and with no interest charge. Some hospitals won’t agree to this but it never hurts to ask.

Forget using a credit card

It’s never a good idea to put a medical bill on a credit card as the card could have an interest as high as 19% or even higher. Plus, it will look just like a regular debt to other creditors. Instead, do what was suggested above and ask your medical provider for a payment plan with little or no interest.

get out of debtHire a debt settlement company

If you have a huge medical debt and the hospital or provider refuses to give you a payment plan you may want to contract with a debt settlement company. These companies have debt counselors that are experienced at negotiating medical debts and are almost always able to do better than you could yourself. In fact, debt settlement is the only way to get debts reduced short of filing for bankruptcy.

While a debt settlement company will charge you a fee, the money it saves you will more than offset it and you’ll still end up saving money. Also, if you have multiple medical debts and contract with a debt settlement company you will have consolidated your debts. This is because you will no longer be required to pay all your various providers. Instead, you will have a payment plan with a fixed monthly payment for a fixed amount of time. This will generally be from 24 to 48 months depending on the severity of your debt.

How debt settlement works

When you contract with a debt settlement company it will contact your providers (and any debt collectors) and notify them that it will be settling your debts. This should stop any harassing phone calls from your providers or from collectors.

To pay for your settlements, you will send the debt settlement company the money you would have used to pay your bills. Ethical debt settlement companies will deposit this money into a trust account that you control. When enough money has accumulated to settle off one or more of your debts, the settlement company will contact you and ask you to release the money. No reputable debt settlement company will use any of your money to cover its fee or to pay any other of its costs. The money will be used only to pay off your debts. At some point the debt settlement company will offer you a payment plan. Assuming you accept the plan you would then have just one payment to make a month.

Be aware that there is one down side to using a debt settlement company. Your creditors will treat your debt as paid in full but this is not how it will be reported to the three credit reporting bureaus. It will be reported as “settled,” “settlement” or “settled for less than full amount.” This will stay on your credit reports for seven years. It will also damage your credit score. However, the damage won’t be as severe as if you had declared bankruptcy.

The net/net

Medical debt can be staggering. We read recently of one person that thought he had planned a procedure where his insurance would cover everything. But then he was hit with a bill of $117,000 from a surgeon who had been called in at the last minute. If you do find yourself drowning in a pool of medical debt, take heart. As you have read in this article there are ways to control it and without having to take on a second or even a third mortgage.

How To Get A Debt Consolidation Loan From A Bunch Of Complete Strangers

Surviving Debt Despite UnemploymentSo there you are buried under a pile of credit card debts. The credit card companies have been calling you regularly and you’re even receiving nasty calls from a debt collector. You wish you could get a personal loan from your bank but your credit is so bad there’s just no way it’s going to lend you any more money You’ve heard there’s such a thing as a home equity loan but you don’t own a home. Or maybe you own a home but you don’t have much equity in it. You’ve actually thought of going to “Uncle” Vito for a loan but you don’t know an Uncle Vito. You’re certainly not going to ask any member of your family for money, as that would be just too embarrassing.

Why consolidate debts?

The reasons why debt consolidation makes sense are pretty simple. Your debts would be easier to manage because instead of having to remember and pay multiple creditors every month you’d only have one payment to make. Second, the payments on a debt consolidation loan should be much lower than the sum of the payments you are currently making. Third, a debt consolidation loan will have a longer term or more years to repay the money. Fourth, if you could get an unsecured loan you would not be risking any asset such as your house. And last but not least this would get all those creditors and that debt collector off your back.

How to get a debt consolidation loan from a complete stranger

Believe it or not you could actually get a debt consolidation loan from a complete stranger. And no, that doesn’t mean walking up to someone on the street with your hand out asking for money. It’s a new way to borrow money called peer-to-peer lending or social lending and it’s already helped thousands of people. The simple explanation of it is that you put in a request for a loan on one of the peer-to-peer lending sites and then sit back to see if anyone or any group of people will fund it. One way to think of it is that there’s a door under which you slip your loan application. If it’s funded, the money then magically comes out from under the door. You have no idea who funded your loan nor do the people that funded it know who you are. The computer does everything so you never have to face someone and ask for money only to get turned down. The worst-case scenario is that your loan isn’t funded but on many of these sites you have the option of polishing up your application and trying again.

The application or profile

Some peer-to-peer sites call your loan request an application while others call it a profile. In either case you will be required to provide information about your employment, your earnings, how much money you need and what you will do with the money. In addition, you will be required to provide some personal information such as your Social Security number.

The site will verify the information you provided. If everything checks out, you’ll then be required to provide information about your bank accounts. The reason for this is that so if your loan is funded, the money can be electronically transferred to your account and the money payments required to repay the loan can be taken out as automatic withdrawals.

Cross your fingers

Once the information you provided has been verified your loan will be listed – probably for 14 days. Potential lenders will review your information and decide whether or not to invest in you. If your loan is funded it’s likely that the money will come from multiple lenders. For example, on one of these sites many of the lenders are allowed to invest only five dollars in any one loan. This means that if you were requesting $1000 it would take 200 lenders to fund the loan. While you might think that this would be impossible it actually happens every day.

The advantages of a peer-to-peer loan

One of the biggest pros of a peer-to-peer loan is that it’s possible to get one for just about any reason you can think of – in addition to debt consolidation. Many people have gotten these loans to pay for a vacation, a wedding, a boat, to repay a student loan or even to start a business. Most peer-to-peer sites offer loans from $1000-$35,000. So if you need just $500 to satisfy an angry creditor then peer-to-peer lending probably isn’t for you.

The bigger the risk the higher the interest ratepercentage

A second advantage of one of these loans is that you might be able to get one even if you have bad credit. This is due to the fact that there are hundreds of investors on one of these sites and some of them that might be willing to gamble on you. In return they will probably require an interest rate of 19%, 20% or even more – to make up for the risk they’re taking.

Anonymity

A third advantage of a peer-to-peer loan is anonymity. The lenders will never know who you are. If you’ve been struggling with debt and have been turned down by your bank or credit union you know that this can be a bit embarrassing. If you apply for a peer-to-peer loan and it’s not funded it wouldn’t be as bad as being told “no” by your personal banker.

Less paperwork

Another good thing about peer-to-peer loans is that you’re not required to fill out and submit a whole stack of forms as would be required by a bank or credit union. The application process is pretty simple and it’s all done online. You may also find out whether or not you get your loan much quicker than is typical with a traditional lender. Once your application has been approved and your loan request listed you’ll have your answer within 14 days and probably quicker.

The major peer-to-peer sites

These sites have become “hot” recently and a number of companies have jumped into the business. However, as of this writing there are only two that are really significant. They are Lending Club and Prosper. Of these two, Prosper is the oldest while Lending Club is the largest. In fact, it’s currently not accepting new lenders because it’s going through an IPO (initial public offering).

Choose one and get started

If you think a peer-to-peer lending site could help you get the debt consolidation loan you need, choose one and get started. As you have read, the application process is fairly simple and if you have less-than-great credit you might stand a better chance of getting a loan on one of the sites than from a conventional lender. Plus, there’s just something kind of cool about getting a loan this way – from a complete bunch of strangers.

Debt Relief Options For Different Financial Situations

Debt Relief Options For Different Financial SituationsThere are many debt relief options to help you get out of your current financial crisis. Of course, it all begins with you understanding what got you in this situation in the first place. This will help keep you out of debt and also allow you to achieve debt freedom a lot faster.

Once you have identified that, you may want to take a look at your finances and the type of debts that you owe. There is no shortage of debt solutions. However, you need to know the right program that will suit your problems best. There is no one formula and to maximize your limited resources, you need to base your debt relief program on how much you can afford to pay your debts.

There is a specific solution depending on your financial situation. Each of our status is unique but we usually fall under one of three categories when it comes to our debts.

Before you find the category and debt solution that suits you best, take a look at your budget first. Identify your income and expenses (excluding debts) and get the difference. Whatever is left will be the disposable income that you can allot for your debt payments.

Debt relief options for people with money for minimum payments

The first financial situation is having enough disposable income to cover your minimum payments. The extreme scenario is having a little deficit on your monthly bills – but nothing significant. If this is your financial standing, you can afford to use a debt consolidation loan to solve your problems. The benefits of this includes the following:

  • Lower monthly payment

  • Possible lower interest rate

  • Longer payment period

  • Single monthly payment

  • Does not affect your credit score.

What you have to know, which is important too, is that this option will not reduce your principal balance. The lower monthly payment is possible because your current balance is stretched over a longer term. The lower interest rate is also responsible for this. But in terms of reducing what you owe, there will be none of that. You will still end up paying for everything that you owe. This means a steady and stable income is needed. You should also boost your savings so that you can meet your debt payments without a problem. This program takes 5 years or more to complete so you need to be sure that your income can keep up with such a long payment period.

There are two popular ways to consolidate your debts.

Debt consolidation loans. This option involves getting a low interest loan that you will get to help you pay for your multiple debts. Once the loan is approved, you can simply go to your creditors, pay them all completely and just concentrate on the single payment that is required from this one loan. To maximize this option, you need to make sure you will get a low interest – which means you either have a good credit score or a collateral.

Debt management. In case you do not have the ideal credit score or collateral, you can use debt management instead of getting a loan. This option allows you to work with a credit counselor who will help you come up with a debt management plan that will contain your proposed lower payment terms. The counselor will present this to the creditor. When approved, you will send a single monthly payment to the counselor who will take charge of distributing the funds to your different creditors.

With the latter, you need to be careful about your choice of company. Make sure you brush up on your knowledge of the Telemarketing Sales Rule (TSR) to help you identify the legitimate companies from the not.

Best debt solution when you cannot make your minimum payments anymore

In case your financial situation cannot afford to meet your minimum payments, you obviously need a more drastic debt reduction plan. This is when debt settlement becomes the better option for debt relief. The whole idea of this program is to convince your creditor that you are in a financial crisis. You want them to allow you to pay only a portion of your debts and have the rest forgiven. This program will give you the following benefits:

  • Eliminate collection calls (if you work with a debt negotiator).

  • Reduce your current balance significantly.

  • Get you out of debt in 2-4 years.

  • Possible elimination of interest rate and other charges.

The catch here is that you need to default on your payments in order to convince your creditors that you are in a financial crisis. This would mean you have deal with a damaged credit score temporarily. Instead of paying your creditors, you will send your money in a secured account and grow it there until you and the creditor comes into an agreement.

While you can do this on your own, you will get a lot of benefits by getting a professional to work with you. The debt negotiator will bring their expertise into the whole process. You will also be left in peace because part of their service includes taking over communication calls. Just make sure that they are certified by authority training organizations like the IAPDA or International Association of Professional Debt Arbitrators.

Credit relief for people in severe financial conditions

In case your conditions are quite severe, your last resort option is to file for bankruptcy. This means your income is barely enough to pay for your basic necessities or you have very little income coming in (or none at all). Most financial advisers will tell you to exhaust other options first before opting for this one. This will have severe effects on your credit score and that will make it even more difficult to recover after getting debt freedom. Having bankruptcy on your credit report will make it hard for you to get financial assistance for a home or a business that you want to put up.

When you file your petition, the court will assign the type of bankruptcy that you qualify for. This involves the means test. If your income is lower than the state average, you can qualify for Chapter 7 wherein your assets will be liquidated and anything that does not get paid will be discharged. If your income is above the average, you qualify for Chapter 13. This means you will be subjected to a repayment plan. This type of bankruptcy is not so different from debt settlement.

The US Courts website hold a lot of information about bankruptcy that will help you understand the whole process. It is best to gather information first so you know your options very well. That will help you make smart choices about your debt solution.

Consult with a debt relief expert to discuss all your options

National Debt Relief, a BBB accredited business, has debt relief experts standing by during extended business hours to explain all your debt relief options and find a plan that is right for you and your specific financial situation. You get a free debt analysis with no obligation and no judgment. Click here to speak with a debt relief expert or call 888-703-4948 today.

What To Do About Those Parent PLUS Student Loans

couple looking at calculatorWe know you wanted to do right by your child – or children – but here you are now just like one of the millions of 30-somethings with a huge load of debt on your Parent PLUS student loans. And you may have fallen victim to borrowing more than you should have just as your child did.

As you may know dependent undergraduate students are allowed to borrow up to $31,000 in unsubsidized and subsidized student loans. Something else you may have learned is that you could borrow up to the cost of attending school – less what other aid your child or children received. Unfortunately, this can add up very fast. There are more than 3 million Parent PLUS borrowers that owe a total of almost $62 billion, which comes out to about $20,000 each.

Face it, your best years are probably behind you

What can make matters even more difficult is the fact that your best earning years are probably behind you. And you cannot transfer your Parent PLUS student loans to your child nor can they be consolidated with your child’s federal loans. Fortunately, there are ways that you can take some of the sting out of having to repay them.

Consolidate and move to an income-contingent plan

Income-contingent repayment programs are not as generous as Pay As You Earn but they could be a good option if you want to consolidate your current PLUS loans. The way it works on Income-contingent Repayment is you will be required to pay 20% of your discretionary income for as long as 25 years. However, you will not be required to meet any income requirements to be eligible. Even if you have just one large loan, it could be good to consolidate so you would qualify for Income-contingent Repayment as this could be a good solution. If you consolidate a Parent PLUS loan, it’s no longer a Parent PLUS loan but a consolidated loan. You could then repay it through Standard 10-year Repayment, Extended Repayment or Graduated Repayment, which is where the payments start low but then gradually increase every two years.

Check out public service loan forgiveness

If you work in a qualified government or nonprofit job that could qualify for public service loan forgiveness, you could get your remaining debts forgiven after 120 on-time payments and you would not even be required to pay taxes on the amount that’s forgiven. However, if you stay on the Standard 10-Year plan, there will, be nothing left to forgive after 10 years of payments. But if you move to the Income-contingent plan, you could see some amount of your debt erased by the government.

The risks of refinancing

It’s possible you could refinance those Parent PLUS loans through a private group. You as a parent are usually a pretty good candidate for refinancing and the chances of being approved are good. You could even find that refinancing lowers your interest rate. The interest rate on Parent PLUS loans is currently 7.21%. There is one bank that offers this option to Parent PLUS Borrowers where you could refinance at a rate as low as 4.74% while variable rates begin at 2.31%. However, it’s important to know that refinancing a Parent PLUS loan has a downside, which is losing the protection of federal government programs. This would also not be a good strategy if you are having a difficult time repaying your PLUS loans because it could be really hard to get approved.

Review your entire financial picture

You’re a very different borrower than your son or daughter and have different concerns and different assets. You may also be nearing retirement, which can make things even trickier. The unique balancing act of playing off those Parent PLUS student loans against your retirement accounts and other obligations is an area where you really need to look at how this is going to impact the whole family down the road.

Video thumbnail for youtube video 4 Tips If You Need To Pay For College YourselfIf you were a student borrower

The news is good if you were a student borrower. Chances are you’re on the Standard 10-Year Repayment program. You have a fixed interest rate and fixed payments until you’ve retired your debt. In the event you’re having a problem repaying your student loans under this program, you do have the same options as those available to Parent PLUS borrowers.

Graduated Repayment

This can be a very good option for young people just out of school that are struggling to start their careers. The way it works is that your payments start low but then gradually increase every two years. The idea is that by the time you reach year seven or eight you will be in a much better financial position and more able to meet the higher payments.

Extended Repayment

This program does just what its name implies. It extends your repayment schedule from 10 years to as many as 30. If you owe a ton of student debts and are not afraid to take on a 30-year obligation, this could be a good alternative. While it would take you much longer to pay off the loan your monthly payments would be much less than with Standard 10-Year Repayment.

Income-driven Repayment

There are also the three income-driven repayment programs mentioned above that cap your monthly payments at either 20%, 15% or 10% of your discretionary income. Pay As You Earn is the one that caps monthly payments at 10% of your household income that exceeds 150% of the federal poverty guideline based on the size of your family. If you were to select this plan, your payments would change yearly, as they would be adjusted based on any changes – either positive or negative – to your household income. You would have up to 20 years to repay the loan and after those years any remaining debt would be forgiven but taxed.

Here’ by s an example of how this works:

Monthly Adjusted Gross Income:     $4,280
(minus) 150% of Poverty Line:         $1,480
Discretionary Income =                     $2,800
(multiplied by) (3) x.10%
Monthly PAYE Payment                    $280

So as you can see if you were to qualify for Pay As You Earn you would have a very reasonable monthly payment.

The second Income-driven Repayment plan is Income-based Repayment. It is very similar to Pay As You Earn except it generally caps your monthly payment at 15% of your discretionary income but would never be more than the 10-Year Standard Repayment plan amount.

Finally, there is Income-contingent Repayment. It has basically no eligibility requirements but caps your payment at 20% of your discretionary income or what you would pay on a plan that had a fixed payment over the course of 12 years and adjusted based on your income.

Good News: You Can Have Your Own Government Stimulus Package

money raining on womanThere was much talk a few years ago about the government stimulus package. It was a $787 billion bill termed the American Recovery and Reinvestment Act of 2009. It contained a huge array of spending projects as well as tax breaks designed to stimulate a swift revival of the US economy. The theory behind this package was Keynesian economics, which teaches that increased government spending can lessen the effects of a recession.

It may or may not have worked

Whether or not the American Recovery and Investment Act actually lessened the impact of the recession we were suffering is still up for debate. There are those who believe that it was successful while others say it was a waste because most of the money was used to pay down debts and reduce borrowing. Be that as it may it did lead to one thing that could be your own government stimulus package. It’s called the Home Affordable Refinancing Plan or HARP.

Never a better time

Thanks to HARP there has literally never been a better time to refinance your home. This is because you could use HARP to refinance it at an amazingly low rate and in doing so reduce your payments by $3000 a year or even more.
Would you be eligible?

To be eligible for HARP you would need to have a mortgage for $625,500 or less – unless your home is in a high-cost area in which case the loan limits might be higher. The whole idea behind this program is that the federal government wants banks to cut your mortgage rates to put more money in your pocket, which is good for the economy.

Unhappy banks

Of course, the banks are not very happy with HARP because it means you could shop several different lenders and not just your current mortgage holder. In addition, your home’s loan-to-value ratio (LTV) can be 80% to 125%. Banks would rather keep you at the higher interest rate you got when you financed your mortgage many years ago. In fact, this is such a good deal that it’s practically a no brainier to jump on HARP now. But you will need to act quickly if you want to refinance your house at these current low rates.

The benefits

Most Americans that do a refinance through HARP save $250 a month. Could you use an extra $250 a month? We thought so. Depending on your current rate you might even be able to shorten the term of your loan. And what typically happens is that one or two payments are deferred or skipped, which would put even more money in your pocket.

Where do you find these low rates?
There are several free websites where you can compare the rates on mortgages and then choose the lowest one. This, of course, is one of the best things about the Internet. It allows you to do business with banks and other lending institutions all over the country – not just in your city or state. One of the biggest and best respected mortgage refinance comparison websites is RateMarketplace.com. It is one of the few online companies that have HARP lenders in its network.

There is no cost or obligation to use RateMarketplace.com and its service is both easy and fast. In fact, it will take you only about five minutes to calculate what your new payment would be. The service is free. You can also calculate what your payments would be if you chose to refinance with cash out, consolidate your debts, get a home equity loan or buy a house. The net/net of using RateMarketplace.com is that you have nothing to lose but maybe your high mortgage interest rate.

Speaking of debt consolidation

If you feel as if you are sinking in a quicksand of debt and have equity in your house, one good solution is to use that equity to consolidate and pay off those debts. Many people have found debt consolidation to be a good way to get their finances under control. While a debt consolidation loan can come in the form of a secured loan, an unsecured loan or even by borrowing from your retirement plan, the best idea is probably to tap into the equity in your home because you end up repaying yourself.

The two types of home equity loans are a straight home equity loan and a home equity line of credit or HELOC, which resembles a credit card in that you pay interest only on the amount of money you withdraw. Most HELOCs have a variable rate of interest and low minimum payments. If you are approved for a HELOC you will probably have 10 years to take out the equity and then another 15 to 20 years to repay it.

man pushing a wheelbarrow full of moneyHow much could you borrow?

How much you could borrow to pay off your debts usually depends on a combined loan-to-value ratio of 80% or 90% of the value of your home. Naturally, the interest you’re charged will depend on your credit score and how good you’ve been about making payments on your debts.

A lower rate of interest

One of the biggest advantages of a home equity loan is that the interest on it will be less than the average interest of your current debts. These loans are relatively easy to get if you have equity built up in your house. In addition, the interest you pay on a home equity loan or HELOC is deductible just as it is with a conventional mortgage — if you itemize your taxes. In fact, a home equity loan is the only type of interest you can deduct under any circumstances except for qualified student-loan interest.

The downside

The biggest possible problem with a home equity loan is pretty obvious. If you don’t repay the loan, there can be horrible consequences. If you can’t make your loan payments, you might lose your house. Your credit score will suffer dramatically and it may be some time before you can get any other type of financing.

Do a careful analysis

You can avoid this by doing a careful analysis of your cash flow to make sure you will be able to make that new payment every month. It’s also good to make more than the minimum payment required although this may not be important if you are using the money to consolidate high-interest debts that are causing you serious financial problems.

A hypothetical example

Here is a hypothetical example of how you could use a home equity loan or home equity line of credit to consolidate your debts. For the purpose of this example let’s assume you have the following debts:

  • $10,000 in high-interest credit card debt with a monthly payment of $172
  • A $4500 car loan with an 8% interest in a monthly payment of $330
  • $3300 in student ßdebt where you defaulted on the loan but that prior to this your monthly payment was $150.

Again for the sake of the example we will say that you have a 30-year mortgage on your house and $50,000 in equity. However, you still owe $100,000. This means that you have debts totaling less than $40,000 and could consolidate them with a home equity loan or HELOC, as you would be well under the 80% loan-to-value ratio. You would trade three monthly payments for a single, lower payment and the interest would be deductible. In addition, if you pay off those three loans, it will improve your credit – especially because that student loan you defaulted on will now be off your credit reports.

The net/net

A home equity loan or line of credit can be a useful tool if you are a responsible homeowner and need to consolidate your debts. One of these loans will provide easy access to capital at lower rates of interest, reduced payments and even a tax deduction. Unfortunately, homeowners who abuse these loans and don’t make their payments can literally find themselves out on the street.

The Dos and Don’t of Loan Consolidation

Stamp Shows Consolidated Loan approvedIf you’ve watched TV for more than an hour or spent any time at all on the Internet you’ve undoubtedly seen all those ads from those companies that would just love to help you consolidate your debts to “cut your payments in half,” “reduce your interest payments”, and “help you become debt free.” This can all seem very tempting especially if you feel your billfold is hemorrhaging money due to your debts. The fact is combining all of your loans or credit card debts into a new loan with a lower interest rate and better payments can make perfect sense. Sadly enough, it doesn’t always work out like that. The fact is that many people who consolidate their debts end up paying more than they would have otherwise. An alarming number of borrowers that get home equity loans end up losing their houses. In addition, many of the so-called “consolidation” programs are not really loans at all. Plus, debt consolidation has a sort of bad reputation and in some cases rightfully so. Still, if you pay attention to these dos and don’ts you might be able to benefit a lot from consolidation.

Do get your credit report and FICO score

Whether you’re aware of this or not, your ability to get a loan and your interest rate will depend on your credit reports and your FICO score.

There are three credit-reporting bureaus – Experian, Equifax and TransUnion. They are required by law to provide you with a free copy of your credit report once a year. You can get your report from these bureaus one at a time or all together on the site www.annualcreditreport.com. The reason you’ll want to get your reports is because they could contain errors that are adversely affecting your credit score. You need to go over each report very carefully. If you do find errors, you’ll need to write the appropriate credit bureau and dispute the items.

Your credit score is a three-digit number that was created by the company now called FICO but until a few years ago was known as Fair Isaac Corporation. Your FICO score is a mathematical representation of your credit reports. It’s created using an algorithm that only FICO understands. You can get your score at www.myfico.com, from one of the three credit reporting agencies or from websites such as Creditkarma.com. If you have a Discover card you’re probably getting your credit score every month along with your statement. Lenders generally look at credit scores in ranges as follows:

  • Between 300 and 499 – Bad credit score
  • Between 500 and 579 – Poor credit score
  • Between 580 and 619 – Low credit score
  • Between 620 and 679 – Average or OK score
  • Between 680 and 699 – Good credit score
  • Between 700 and 850 – Very good or excellent credit score

If you find you have a credit score of 680 or above, a consolidation loan might be a good option.

Don’t fail to investigate other options

Before you get yourself tied up in a consolidation loan with a term of seven or even 10 years, be sure to check out your other options. If your goal is to save money and you’re not in a really bad financial situation, just pay off your debts faster by prioritizing them. This is called snowballing your debts. It is where you concentrate on paying as much as you can each month on the debt with the highest rate while making sure you continue to make the minimum payments on your other debts. This has helped many people become debt free within two years or less.

Do contact your credit card company

If you have relatively good credit call your credit card company and see if you can negotiate a better interest rate. In the event that they refuse to give you a lower rate, consider transferring your balances to a credit card with a lower long-term rate.

Don’t do a balance transfer without knowing all the facts

You could transfer your high-interest credit card debts to a 0% interest credit card. This is a card where you pay no interest during an introductory rate that can be anywhere from six months to 18 months, which gives you a sort of time out during which you could concentrate on paying off your balance. If you don’t get your balance paid off before your introductory period ends, you’ll have to start paying on it and your interest rate will likely skyrocket to 19% or higher.

Husband and wife happily talking to another personDo try a credit-counseling agency

There is probably a reputable credit-counseling agency where you live. If so, it should be able to provide you with either free or low-cost advice on how to manage your debt. You will be assigned a counselor that will review your finances, help you prepare a budget and provide you with tips for getting your finances under control.

Don’t sign up for a debt management plan

Your credit counselor might try to talk you into a debt management plan. Don’t agree to this without understanding it could take you as long as five years to complete it and you might have to give up all your credit cards.

Do talk with your mortgage holder

Reputable mortgage companies will usually work with you if you’re having a temporary problem. As soon as you see that you’re having trouble, call the company. It may be willing to temporarily suspend your payments, accept reduced payments for a period of time or let you pay interest only. Alternately, you might extend your term or the amount of time required for repayment, which would reduce your payments.

However, your best bet might be to totally refinance the loan. For example, there is a federal program called HARP (Home Affordable Refinance Program) where you could refinance and lower your payments even if you owe more on your house than it’s worth.

Don’t borrow from your life insurance

If you have a whole life policy, you could borrow against its cash value. This is usually a low interest loan that would get you quick cash to pay off your debts. However, there can be tax implications on the money you borrow. Plus, if you don’t repay the loan, the money will be subtracted from the amount your beneficiary receives.

Do try to pay off your debt quickly

One of the downsides of a consolidation loan is that you may have lower monthly payments but your repayment will be spread out over a longer period of time so you’ll be paying more, sometimes a lot more, on a consolidation loan then you would have to otherwise. Figure out your budget and then set the monthly payment on your loan as high as you possibly can. The quicker you pay off that loan the more money you’ll save and the faster you’ll be out of debt.

Don’t get the wrong type of loan

It’s important to understand there are two types of debt consolidation loans – secured and unsecured. Second mortgages, home equity loans and secured lines of credit are secured loans – that is an asset such as your house secures them. These loans usually have lower interest rates than the unsecured ones. In addition, if you get a home equity loan the interest you pay on it will probably be tax deductible. Of course, if you fall behind on a home equity loan, you could end up losing your house.

Unsecured loans can be a better option because you don’t have to risk any assets such as your house. If you have decent credit you should be able to get one of these loans at a good interest rate. But if you have poor credit you may find that you’ll get a low rate only with a secured loan.

Do shop around

Finally, make sure you get quotes from several different lenders and compare the terms and the interest rates very carefully. Your best bet is often your own bank or credit union – especially for personal or unsecured loans. But it’s always a good idea to shop around. When you do this, be sure to get your quotes in writing so you can compare lenders side-by-side. And make sure you understand all the fees associated with the loans as well as their terms and conditions.

Three Ts Of Debt Consolidation Denial

Problematic consumerDebt consolidation is a financial options offered by numerous lenders in hopes of being able to encourage the borrowers to pay back debts. The program makes it easy for the borrower to make the payments and get up to date with the lender. It is also a very valuable tool of lenders and even the government in addressing delinquency and default in debt and loan payments. It helps consumers solve multiple loan problems as well.

The lenders offer the program to be able to close several loans of the borrower to enable them to concentrate on one payment amount every month. It also pays-off the other loans and does not reflect settlement in the credit score. As most people have become aware, settlement damages the credit score by reflecting that the borrower was not able to make the payments and had to settle with the lender to pay off the debt at a reduced amount.

As consumers troop to different lenders to be assessed for debt consolidation, they are hopeful that their application would be approved to be able to do away with the nuances of payment for several types of loans. It can also give them a little more elbow room when the monthly payments goes down to be able to start building up the emergency fund or put more for retirement amount.

Debt consolidation denial

As the consumers sit down and wait for the approved loan amount to consolidate their several loans, new interest rate to be used and the new monthly payment, the loan officer might get back to you with a denied application. There are debt consolidation techniques but at this point, this is tough if you are already counting the ways how debt consolidation will work to your advantage. Some of the most common reasons for this debt consolidation denial are:

Too many loans

The lender might be under the presumption that you are adding on more loans to your existing debt. As soon as they fire up the computer, they will see all your existing financial obligations and might deny your application for the loan. They might be quick to the draw and draw the conclusion that you will not be able to meet all the payments if they approve the loan.

As your objective is debt consolidation, you would need to explain to the lender that the very reason you are taking out the loan is to pay off the other existing loans. It is not to add up to your existing financial payments. If they realize your plan, they just might approve of the loan. Again, this is still not an assurance of approval because some lenders are skeptics and will assume the worst – that you are just trying to squeeze out a loan with no plan of repayment.

This is not always the case but it is a possibility. If the lender would not agree to your plan, you can look for other lenders that would be open to your financial objective. It is not the end of the world if you get rejected by one lender. It is actually an opportunity to do a financial audit and see where you can make some improvement before approaching another lender to talk about debt consolidation.

Too low income

One of the primary things the lenders will look at is your ability to pay. This includes income from employment or income from a business a venture. If you are denied because they conclude that you do not have enough cash inflow to meet the payment requirements, then you can double check your income sources. You might have overlooked one source or forgot to declare income that is coming from an investment.

If your lender still determines that your income is not enough, it would be best to sit down and go over your income and expense budget. There might be something that you need to closely look into like missed payments or missed income. It might be the reason that you are still in debt – you need better money management.

Too risky Credit score

As you approach private lenders to take out a loan to consolidate your debts, another consideration is your credit score. This is especially tough because if there is already financial hardship, chances are your credit score would have already been affected. And the same reason why your credit score is suffering is what you hope to correct with your debt consolidation.

This is a tough call for the lender because the lower your score, the higher your risk, the lower your chances of being approved for the loan. One way lenders would agree to granting you a loan is if you agree to a high interest rate. This is meant to cover their investment risk and be assured of earning enough in the beginning to cover risk of payment default.

These are the most common benchmarks of lenders to assess if you are a good candidate for debt consolidation. If there are any denials on your loan application, look to check these three items and talk to your lender on how to go about your debt consolidation target.

Here is a video on debt consolidation:

Steps after debt consolidation

If you are successful in getting a debt consolidation loan, this is a great start in getting your finances back on track. This could help you make your monthly payments easier, send out lower check amounts for payments and not miss out on any loan or debt payment. But with debt consolidation, here are some things that a borrower would need to look into.

  • Pay-off loans. It is important to use the loan meant to consolidate your debt to do exactly just that – debt consolidation. You need to pay off all loans in order to enjoy the benefits of consolidating your debt all in one payment. Investments are a good idea but not for this specific purpose. If the target amount does not pan out, you will be in deeper financial hole. You will be stuck with your original loan payments with the addition of the new loan meant for consolidation.
  • Focus on payments. When you start debt consolidation payments, you need to keep at it and try your best not to go into delinquent or default payment status. Debt consolidation is meant to help you get out of debt but if you do not make the payments, you will fail to reap the advantages of making single monthly payments for all your previous loans.
  • Extra payments. Using debt consolidation usually carries a long repayment period. One great financial move is to make extra payments to your loan. If the lender will allow it, send it to principal payments. Even Azcentral.com is suggesting thsi move to pay down mortgage loan. This will result into shorter payment term and save you payment in interest in the future. It will also make you feel better that you are lowering down the actual amount of the money you borrowed rather than the interest.

Debt consolidation is a great financial option for people trying to streamline monthly payments. This is usually more advantageous for consumers that are able to meet at least all the minimum payments on all the debt and loan payments. It guarantees one monthly payment ensuring that the borrower is able to manage payments monthly and not miss out on any financial obligation.

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