When you look in a mirror, what do you see looking back? Is it a frazzled looking person all stressed out by debt? Being heavily in debt causes stress and stress can cause physical symptoms. You could be experiencing an irregular heartbeat, an upset stomach, insomnia, headaches and even worse. If you do nothing, the problem will only get worse. This is why one of your best moves could be to find loans for debt consolidation.
How a credit card consolidation loan could help
The idea behind debt consolidation loans is very simple. You just borrow enough money from some source and use it to pay off your debts. The major advantage of using debt consolidation is that you will have a lower monthly payment than the sum of the payments you’re making now. Plus, you will have only one payment to make a month, which will be much easier to keep track of and pay on time than the multiple payments you’re probably making now.
Try your bank or credit union
The first place to find loans for debt consolidation is your bank or credit union. If you owe less than $10,000, you should be able to get an unsecured loan or what’s often called a signature loan. On the other hand, if you owe $10,000 or more, you may have to try to get a secured loan. This is one where you pledge an asset as collateral to secure the loan. The asset most Americans use to secure one of these loans is their house – in the form of a refi, a second mortgage or a homeowner’s equity line of credit. Of course, you must have enough equity in your house to borrow the amount of money you need to pay off your creditors. You will also need to have reasonably good credit to get either a secured or unsecured loan.
Borrow from your retirement fund
The best person to borrow from is you. If you can borrow from yourself, you don’t have to worry about your credit rating or fill out a loan application. How can you do this? It’s pretty simple. If you have a 401(k) or an IRA retirement account, the chances are you can borrow money from it. For example, most 401(k) plans allow you to borrow up to $50,000 or half of what you have in your account, whichever is less. You will need to pay the money back within five years and you will pay interest on it – but to yourself.
While you can also borrow money from an IRA, it’s not as good a deal as a 401(k). You can take money from it but only for a 60-day period for it to be considered tax-free. If you fail to put the money back within those 60 days it will be treated as ordinary income and subject to regular income taxes. If you’re less than 59 ½ there will also be a 10% penalty. Plus, you can’t put the money back.
Borrow from your life insurance policy?
If you’re paying on a whole life insurance policy, the chances are that it’s accumulating cash value. How much cash value it has will depend on how long you’ve had the policy. If you’ve had it for 10 years or longer, you may have a fair amount of cash value. In this case, you should be able to borrow all or part of your policy’s cash value. The best part of borrowing on an insurance policy is that you can take as much time as you like to pay back the money or not pay it back at all. Of course, when you die, your heirs would not get the money you borrowed. In other words, if you have a $100,000 whole life policy and borrowed $30,000, your heirs would get only $70,000.
The downside of debt consolidation
The major negative of a debt consolidation loan is that it does nothing to slash your debts. If you owe $15,000 in unsecured credit card debts and get a loan to pay them off, you’ll still owe $15,000 and will ultimately have to pay it all back. This is why many Americans have turned to debt settlement. This is where we negotiate with your creditors to get your balances reduced to help you get out of debt in 24 to 48 months. We’ve saved our clients hundreds of thousands of dollars and there’s no reason why we couldn’t help you pay off your debts for less than you owe. Call our toll-free number or start a chat so that we can explain debt settlement and how you could harness it to become debt free.