Online debt consolidation is something that can bring you great relief as your payments go from many to one. This can come in one of two forms, a loan or a debt management plan (DMP) Which one of these will work best for you will depend on your financial situation and how you manage your money. Let’s look a little more closely at each of these forms of bill consolidation.
The first type of debt consolidation is done with a loan. In most cases, the amount of money required to consolidate bills requires a loan that is secured with your home or a second mortgage. The benefits are lower monthly payments, tax deductible interest, lower interest rate and one monthly payment.
The downside of a debt consolidation loan is the length of the loan. The reason the payments are lower is because the loan has been spread out over a longer period of time. The big disadvantage to debt consolidation loans is they are secured with your home. If you do not make your payments, the lender has the right to foreclose on your home. You must also be credit worthy to use this solution for consolidating your debts.
The second type of debt consolidation is done through a credit counseling service. Your bills are consolidated and you make one monthly payment to the credit counseling organization who then disburses your payment to your respective creditors. The benefits are one monthly payment, reduced and possibly eliminated interest rates, elimination of fees and no more interaction with debt collectors.
The disadvantages are the possibility of your credit being effective negatively in the early stages and your credit accounts are closed. But these are things that will change as you near the end of your debt management plan. These are not things that should deter you from using this option.
Which of these plans you use depends on how stable you are financially and how disciplined you are with money. In most cases, it is not a good idea to try to resolve credit card debt with a loan. If you have credit card debt, the worst thing that can happen is your accounts will go to collections and your credit will be negatively affected. However, if you consolidate your debt with a home equity loan and you cannot make your payments, you could lose your home. Credit counseling is one of the best options for consolidation and paying off your debt.
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Help answer the question about debt consolidation
What company or companies gives out debt consolidation loans to people with bad credit?
I want to know if you personally found a company which considered your case and gave you a loan even though you have bad credit and outstanding balances. I have researched enough about counseling and debt consolidation loans. I just want to know who has actually gone through the process and which company you used. Thanks
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Debt consolidation loans are usually a rip-off, extending loans way out and you end up paying a lot more in interest, plus the loan origination fees increase the amount owed.
Instead:
Transfer credit card debt to lower interest rate cards, some will give you 0% for a transfer. Do this before deciding which one has the highest interest rate to pay off first.
Pay at least double the minimum monthly payment on the credit cards and car loan. This extra will go entirely towards the principal, and reduce the debt a lot faster.
Pay off the highest interest rate credit card (or loan) first.
It is also a good idea to pay extra principal on your house, to reduce the interest and increase the equity.
Sell the car and get a used one that costs less if you have to.
Destroy your credit cards and don't use them again, instead get a credit/debit card that pays interest and cash back for any charges. So you make money when using it instead of pay money.
If you have 10k in the bank, why not use half of it on your debt. That would make things much more manageable.
Then get yourself on a written budget and attack the other 7500.
Call the hospital and see if they have any programs that can help. Last month when I ended up in the ER with my gallbladder we got put on a payment plan where we only pay off $28 a month until the bill is gone. The surgeons office also worked out a plan where we actually only have to pay half of what the bill would have been (because my dingbat husband cancled our health insurance back in May *smacks head against wall*).
Stay away from any that charge a fee.
Most if not all of these companies will trash your credit.
What they do is not pay your creditors for months and then try and settle for less under the threat of bankruptcy. No special skills. They just don't pay.
Your creditors do not have to deal with these people because it is your debt.
Also, If they don't pay you creditors. You, and you alone are still responsible for the debt. Your creditors will sue you and not the company you hire.
Most of the debt repair/consolation/settlement companies want their fees up front and leave you credit trashed.
Check nfcc.org for listings legit non-profit credit counseling services. They can help you set up a budget and work out clearing up your debt.
You can tackle your debt yourself by putting every extra penny on the highest interest rate debt, while making minimum payments on the rest. When the highest is paid, move to the next, till they are all paid off.
It will take 2 or 3 years but if you work at it, you'll be out of debt with a good payment history.
You don't need anyone to do it for you. All they do is negotiate your debts for you and collect a fee. You can do it yourself!
Call all of them and work out a payment plan and try to get your interest lowered or stopped.
Then, make the minimum payments on every one of them. On the lowest dollar value, put all your extra effort toward paying it off. Once it is paid off, then roll that extra money to the next largest balance. Continue this snowball until all your debts are paid off.
You proabbly need to cut your expenses back to the bare minimum. Get rid of cable, cell phones, internet, etc. Lower your electric bill, gas bill, water bill, etc. Don't eat at a restaurant until your debts are under control.
Try to increase your income by getting a second job. If you have a car with payments, get rid of it, and buy a good dependable used car for CASH.
Go to the library and get "The Total Money Makeover". Read it and follwo it carefully.
Go check out Dave's website as well.
http://www.daveramsey.com
I have been a reporter and author on the debt industry for over 4 years. I have reviewed several companies in regards to Christian debt consolidation as several of my readers have asked this exact question. The main thing to look for is a company that offers several options, a free consultation, and has an excellent BBB rating. I have tried over 35 different services and this one has been the best above all others:
http://www.ChristianDebtConsolidation.com
You will notice that it has a legitimate website URL and is not being used for marketing purposes like the other answers submitted to this question.
I get this question a lot. I have personally reviewed over 50 different programs and have enrolled my credit cards in 7 of them just to test them out for the readers of my blog. Of the 7 I have tested, 2 of them have been Christian debt consolidation. It is virtually the same service but based on Christian principles. So, to answer your second question, I would say "yes" if you feel that sort of service will help you stay in the program and interact with the support staff.
Here is the best site I have come across:
ChristianDebtConsolidation.com
http://www.christiandebtconsolidation.com
Having a domain name that cannot simply be bought for $8 on Godaddy should be the first indicator that the site is legit.
Nope. Most charge insanely high fees and most don't work. You are only going to improve the situation by actually paying attention to your finances. If your situation is dire – try Dave Ramsey. He's hard core but his plan works – but only if you grow up and get serious.