I have a friend who was once very seriously in debt. He described his debt as a crazy, old uncle sitting off in a corner that everyone was trying to ignore but couldn’t. If you’re having a problem with debt, it might not feel like a crazy, old uncle to you. It might feel more like a huge stone weighing you down or a big, black cloud hanging over your head. Whichever it is, one thing is certain and that is you would like to get rid of it.
It’s not easy being in debt
If you were ever a fan of the Muppets, you probably remember the song “It’s not easy being green.” Well, it’s not easy carrying a big load of debt either. You’re probably being harassed by debt collectors or the credit card companies themselves – at all times of the day and night. While you do have certain rights due to a bill passed by Congress several years ago called the Fair Debt Collection Practices Act (FDCPA), very few bill collectors pay any attention to it as you may have learned. I’ve read stories of people who were called five or more times a day by debt collectors, both at home and at work. That is illegal but still done.
Consolidating credit card debt with a debt management plan
One way that many people have chosen to consolidate credit card debt is by going to a consumer credit counseling agency. These agencies usually offer their services free or for very small fees. They will go over all of your finances, help you develop a budget and create a payment plan to get rid of your debts. Your credit counselor will work with the credit card companies to get your interest rates reduced and your payment plan accepted. Once that all your creditors have accepted your payment plan, you will no longer be required to pay them. Instead, you will send a check each month to the credit counseling agency, which will then pay your creditors.
The downside of a debt management plan is that you will have to cut up all your credit cards and not take on any new debt during the five years or so it will take you to complete your plan. Also, if you miss a payment, the credit counseling agency could terminate your plan and you might end up in worse shape than when you started.
Consolidating credit card debt with a consolidation loan
A second way to consolidate credit card debt is by taking out a consolidation loan. If you have a sufficient amount of equity in your house, you can get either a second mortgage or a homeowner’s equity line of credit (HELOC) and use the money to pay off your debts. This is called a secured loan because you pledged your home as collateral. The advantages of a debt consolidation loan is that you will have a lower monthly payment than the sum of your current payments and you will get all your creditors – and those debt collectors – off your back.
The con of a debt consolidation loan
While a debt consolidation loan might help, it does come with several drawbacks. First, it will likely take you from seven to 10 years to pay it off – which can be a very long time. Second, if you use your house as collateral, you risk losing it because if you were to default on the loan, your lender could repossess it.
Using a debt consolidation company
A third way to consolidate credit card debt is by using a company such as National Debt Relief. We lead the industry in helping people get out of debt the smart way. National Debt Relief provides one of the best debt reduction plans that can help consumers reduce their credit card bills and save thousands in the process. We can help you create a payment plan that should get you out of debt in 24 to 48 months and it will be one you can afford.
Get more information on debt consolidation through debt relief by filling out our form or calling our toll-free number.