Debt Consolidation: Do It Yourself
However, if your situation is not so complicated, you can carry out your own debt consolidation process without too many hassles.
If you don’t have too many creditors and different types of loans and credit cards, solving your debt problems doesn’t have to be so complicated. You can save the money a debt consolidation company will charge you and solve your financial difficulties by yourself.
Debt Negotiation
The main part of a debt consolidation program is debt negotiation. What you need to do is to contact the lenders and try to speak with someone who has the ability to decide over your debt. This can usually be done with personnel from administrative or legal departments. Customer Service won’t help you on this matter; just ask them to put you through to the proper department.
Once you’ve contacted the lender, you need to make things clear. You have to state that you are unable to repay your debt under the current terms and that you need to have your debt rescheduled under more advantageous terms in order for them to get their money back. Don’t mean it as a menace, you need to sound concerned, they need to understand that you want to pay but you can’t and that if they are flexible enough they’ll be able to recover their money without entering long and costly legal processes.
Unless the lender holds a real estate guarantee, chances are that they will tailor a new loan with favorable terms so you can retake your monthly payments without sacrifices. If you are convincing enough you can get all the debt created due to punitive fees and interests eliminated and a new loan reschedule to suit your needs.
Get a Loan for Consolidating
Another thing you can do, either instead or after debt negotiation is to obtain a loan for a considerable amount repayable over a long period of time so you can use the money to cancel outstanding debt and end up with a single monthly payment with a lower interest rate. By doing so you’ll get the same results as a debt consolidation company handling your payments. You’ll have a single monthly installment to worry about and you’ll also save thousands of dollars on interests over the whole life of the loan.
Doing this after debt negotiation is better, since you’ll already have reduced your debt substantially after debt negotiation. If you add to that reduction the money you save by exchanging your current debt with a single debt consolidation loan, you’ll really improve your financial situation and you’ll be able to recover from bad credit within a couple of months.
In order to get approved for such a loan you’ll need to hold some equity on your home. This kind of loan can only be obtained by applying for a secured loan. A home loan, a cash out refinance loan and a home equity loan are the options suggested by most debt advisors.
By: Mary Wise
May 29, 2010
Debt Consolidation Services – Get an Affordable Repayment Plan For Your Unsecured Debts
By choosing to work with a debt consolidation service, you can get an affordable repayment plan for your unsecured debts. Many unsecured debts, like those owed to credit card companies, carry high interest rates. Additionally, they often have different payment dates, so managing the payment of all of them can be both complicated and expensive. Debt consolidation can help you to lower your monthly payment to something more affordable, and can help you to simplify the process in a number of other ways. Debt services employ financial professionals that can help you to set up a plan that can be the first step to ending financial hardship.
This approach is designed to replace multiple unsecured debts with a single loan that has more favorable terms. The mechanics of debt consolidation involve taking a new loan that is large enough to cover all of one’s smaller debts that are being consolidated. These smaller debts get paid off and the borrower now has a single loan to pay each month. This represents an immediate simplification because there is only one loan that must be paid. One of the largest challenges faced by those with financial difficulties is managing multiple payments – debt consolidation eliminates this issue.
The second major advantage of debt consolidation is that the new loan is written with more favorable terms for the individual taking the loan. This means that in most cases the interest rate on the new loan will be lower, the repayment term may be longer, and the procedures for making payment may be more straightforward. The lower interest rate means that over the course of the loan, less money must be repaid – the loan is less expensive than the original collection of loans. In most cases, this alone will lower the monthly payment, but in any event, it lowers the cost of the loan over the course of repayment. If the repayment term is extended, this will also help to lower the monthly payment. This may mean that the total cost of the loan increases because the interest rate will be paid over a longer term, but for most individuals looking for consolidation, lowering the monthly payment is the primary goal. Lastly, consolidation loans typically offer multiple payment options that are designed to ensure easy and regular payment. These factors combine to form a plan for repayment of unsecured debts that is affordable and can allow an individual to begin the process of ridding him or herself of unwanted financial challenges.
By: Hector Milla
May 8, 2010
Debt Consolidation Loans – Thousands Now Out Of Debt, Who Never Thought They Would Be!
A Debt consolidation loan: Is a personal loan you use to pay all your debts. You may obtain it from a finance company, bank, credit union, debt consolidation company, merchant association, debt pooling service, or nonprofit consumer debt service. You may also borrow from friends and relatives.
A Debt consolidation loan: Lets you effectively shift responsibility for many debts to the responsibility for one larger debt. In order that this debt is manageable, your payments are spread out over a longer period of time. As interest accrues on this type of loan, the total amount of debt you owe also increases. You trade a larger payback and longer debt period for a smaller periodic payment.
Sometimes a debt consolidation loan offers an immediate answer to your debt, allowing you:
The convenience of paying only one creditor
A lower monthly bill
To shop for a lower interest rate and more favorable terms
An alternative to bankruptcy
To possibly save your credit.
With a consolidation loan, Your fixed monthly consolidated payment is calculated according to the lowest payment amount accepted by your creditors.
The agency you have hired will distribute the amount of your fixed monthly consolidated payment to each creditor.
Most creditors will only reduce or stop your interest fees if their minimum payment is met, but if so, the interest rate reduction with these programs can range from no change to the freezing of interest depending on the creditors policy.
This can save you thousands because rates that are usually 12%-24% can get reduced to 10%, 8%, 6% or 0%
Once you’ve found yourself in debt it may feel like a downward spiral from which you don’t know how you’ll ever regain your footing.
It’s hard enough to find simple answers and may seem impossible when the collection agencies constantly call your house and threaten the security of you and your family.
Ultimately your decision to choose a debt consolidation loan, a debt management program, or a consumer credit counseling program to consolidate credit card debt, should be based on your own personal financial situation.
By: Vincent Dail
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