Friday, February 20, 2009

How to consolidate debts?

Debt consolidation is not a complete solution; however, it can provide some instant relief. Debt consolidation is a process of consolidating your credit card debt, payday loan, mortgage loan, personal loan, medical bill into a single monthly installment or payment. It's a process of negotiating with creditors. Its better to take help of a debt consolidator, who negotiates with creditors on behalf of consumer. A good debt consolidator only suggest for a monthly payment that is affordable for the consumer.

There are many benefits of consolidating debt, such as lowering monthly payment, reducing interest rates, removing fees, will be able to reduce balance faster and become debt free in 4-5 years, getting rid of collection calls and more, avoid filing bankruptcy.

How to start the debt consolidation process?

1. List your debts including mortgage, credit card, car loan and other personal debts.

2. Note down the balance, interest rate and monthly payment.

3. Calculate the total amount you will pay on completion of the loan period.

4. You may consider refinancing your mortgage.

5. Use a credit card with low interest rate. Transfer balances of other card to one card.

6. Consult a debt consolidator to negotiate with creditors. Contact a non profit service for debt

negotiation.

7. Consider taking a debt consolidation loan from a reputed company with reasonable interest rates.

Debt consolidation is the best option to avoid bankruptcy, which affects your credit badly and you may face difficulty in getting any sort of financial help in future.

1 comment:

Rachel Davis said...

Lovely article.
Debt consolidation loan is a kind of personal loan with which you can consolidate your dues into a single payment. That is, you pay off debts using a single loan. Then you'll have to make a single payment each month in order to pay back the consolidation loan. This helps in paying off debts without having to deal with several creditors at a time. :)