So much information is shared with the public regarding debt consolidation programs – both true and untrue, which confuses many. This is why you should be careful with where and who shares such information with you to avoid getting into pitfalls of financial crisis. Consult and call the number 1 debt consolidation company to get the correct information.
Debt consolidation programs involve combining someone’s multiple debts to make it simpler for the borrower and in many cases, reduce the monthly payments for the borrower. If you are considering to consolidate your debt, your outcome will depend on your financial discipline and the decisions you will make from the financial knowledge you have. It is therefore highly recommended for you to seek the services of a financial counselor to get guidance and financial resources on how you can become debt free soon.
When can you use debt consolidation programs?
As mentioned above, a priority reason for considering this program would be to simplify your life. This is important since stress can lead you to make poor decisions that can make you fall deeper into debt. It is therefore a brilliant decision to seek help for your own well-being and be in the right state of mind and emotions.
When your debts are consolidated into one, you will stop forgetting about paying crucial bills as you used to. Moreover, chances are you have been settling your debt with high monthly payments than you can barely afford. This is caused by handling different debts that have different interest rates and other costs. When you add the interest rates and other additional costs of the debts, you will find that your debt payments are very expensive. You can combine all of them through consolidation and lower the interest rates, which will in turn lower your annual percentage rate. You can also choose a lower monthly payment that will not cause too much strain to you.
What about consolidating debt with a finance company?
Getting a consolidated loan from a finance company can be viable for you if you have been turned down by a bank or your local credit union. However, collaborating with a finance company can be limiting as you will see below:
You will be charged for other processes like the origination fee. Get to find out all the fees that you will be required to pay to avoid surprises. Read their fine print very carefully!
-Higher interest rates
The range of interest rates by financial companies is usually higher than what banks offer. This is especially so to cover for the borrower’s poor credit history. Although their monthly payments are usually more favorable than banks, there is a cost to this. The longer you take to pay off your debt, the higher your debt will increase in interest.
-Lowers your eligibility
If you have a good credit history, you should refrain from getting a loan from financial companies. This is because having a financial company in your list of lenders is not good for your record. It will seem like you turned to a financial company since you did not qualify with a bank. Banks know that people run to these companies in desperation, which is not a good message.
How can you go about debt consolidation?
All organizations that offer debt consolidation have different plans. You should get information from top debt consolidation reviews on all the plans that different organizations offer and what each plan entails so that you make a solid decision. The three major plans that cut across all organizations are:
- Debt settlement
Many people confuse ‘debt settlement’ with ‘debt consolidation’. Although these terms have different meanings, those in the industry use them very interchangeably, which causes a lot of confusion. Debt settlement is agreeing with the creditor to lower the rates at which the borrower was paying initially. This service is commonly offered by counseling agencies for consumers that would like to consolidate their debt.
- Debt management
With debt management, you will be able to get assistance to pay your debts faster than you would have on your own. You will be offered a repayment plan that usually offers lowered costs and interest rates. Debt management services are a great way to improve your credit score, since you will get assistance to pay off your debt a bit more easily. This will need you to be more committed as the terms will be more manageable to you.
- Debt relief
You can get debt relief, including national debt relief for your unsecured loan. The debt relief organization can negotiate lower costs for your debt repayment. It is worthwhile to collaborate with such expertise since they understand what kind of negotiations can make your case win. Your negotiation may not be successful if you do it yourself.
Negotiations between debt relief companies and creditors are usually successful because of their system of payment. When you enter into an agreement with the organization, the relief company first ensures that substantial money has accumulated into the creditor’s account before they start the negotiations. In case the consumer is unable to accumulate funds into the creditor’s account over a period of time, the company can offer a payment plan. This gives the debt relief company a better stand since the creditor realizes that there is progress.
You can get an arrangement with a debt relief organization whereby you will not need to pay any origination fees, nor any other payment until the organization settles your debt. Depending on the size of the debt, most customers are usually able to clear the debt through relief programs between 2-4years. The debts that can be cleared through this program include medical bills, business debts, credit card debts and other unsecured debts.
Get counsel from the very beginning to avoid mistakes that will cost you later on. For instance, avoid getting a secure loan since it can greatly limit you from getting assistance later for another loan or a debt consolidation plan. Research well on all the financial options available, then choose a plan that is suitable for you and be committed to make it work.