Wonder How to Consolidate Debt with Bad Credit? When we are submerged in debts and dues and fail to repay our loans, we feel so helpless. You might have planned out everything, and yet things go out of hand.
Your monthly budget exceeds your income and you fail to make the minimum payments due each month. As a result, the real amount never gets repaid and as time goes by, interests keep on increasing. Or worse, you loose track of how much you owe to the credit card companies. All of this results in the accumulation of debts which has to be tackled or else you have no respite other than filing for bankruptcy.
How Can You Benefit From Debt Consolidation?
When you are sick of struggling with your multiple credit card loans, car finance packages, educational loans, and many more , the greatest solution for you would sure be to consolidate your debt. It is really difficult to deal with numerous debts that are to be paid every single month on the due-dates, or otherwise you shall have penalties and will have to spend a lot more money in the end. And if you have hardships earning sufficient sum of money to pay all these each payday and withdraw some from the credit card, you will be all in in debts more each month, while the situation turns out to be a complete mess.
If you consolidate debt, it should turn out to be a lot easier to deal with all this,, and due to with consolidate debt loan, you will discover how simple this is. As a result you can forget about multiple creditors and finding cash each time. Some individuals are scared to consolidate debts, because they do not understand what the advantages are.
- No need to secure
You do not even need to be a homeowner to consolidate your debt, for you can apply for unsecured loans too. With these you can take the money without security. But still, if you are a homeowner, it is recommended to get a secured loan, because in this occasion you can get greater sums and will also have a lower interest rate, as the insecure loans are as a rule more expensive than secure loans. But still, if the if the amount of money proposed with an insecure loan is enough to consolidate your debt, you can select this solution.
- Save some cash
When you get a consolidate debt loan, you as a rule minimize your monthly installments, because there is a smaller interest rate than different loans, mainly credit card loans. So debt loan consolidation may even let you consolidate your debts and lets you minimize the amount of money you have to pay every month. Even more, instead of dealing with numerous loan providers, you will have only one.
- No more many creditors
When all the debts to the many lenders will be paid right as you get a consolidate debt loan, so there will be no reasons for them to keep chasing you. You will have just one lender, the one you get the consolidate debt loan from. In fact, it will seem to you like blessing, when you forget about all those creditors.
- Possible credit history improvement
It will doubtlessly not hurt your credit history, because if previously you sometimes skipped the paydays because of the amount of debts, so now you may even benefit.
There are no problems if you are careful enough. When you are not, and you have secured your consolidate debt loan with your house, it can be repossessed. Else, when you use debt consolidation and begin using your credit cards over, this can put you into a greater disaster than you had previously. You may consolidate about any type of debt.
3 Tips How to Consolidate Debt with Bad Credit?
Men have always chased dreams. However, never before anyone in his wildest dreams anyone would have thought possible what one could achieve so quickly now a day. World is practically one phone call away. What with credit cards, electronic money transfer, the miracle of instant access through internet and satellite communication. You can achieve whatever you want if you have the will and money. Ok forget about money. All you need is a will. As if you are willing, you can always find someone with just the plan you needed. It all just adds up to your overall debt burden and before long, you are struggling to stay up with your payments.
Get a debt consolidation loan!
Well, there is a solution for every problem and most probably, the solution to your problem is to take one of those debt consolidation loans. You will be wondering has this man taken leave of his senses. “I cannot pay my old loans and he is asking me to take out another of those debt consolidation loans. Well let’s take a look at the situation. You have multiple loans from various sources and most probably they are insecure personal loans. Of course these are the loans where you have to pay the highest rate of interest. This gives rise to your main problem. Not only it is very difficult to keep track of all the payments as they all would have different dates of payments and you have to keep all of them straight.
Another problem is the high rate of return that you are paying each of these companies individually. Now, what you can do is go to a bank or a lender and ask them to make you a consolidated loan equal to the total amount you owe to all your creditors. It means that because you are going to borrow all the money from the same source. Therefore, they are going to charge you a much better rate, which in this case means a lower rate than the one you were paying to all your creditors. In addition, you can negotiate with them to have a secure loan. As, they offer the lowest rate of return against these loans as there investment is never in danger. They will have your collateral for auction if you default on your loan.
the solution to your problem is to take one of those debt consolidation loans
Advantage to you is that you just have to make one payment to one lender and can than relax and enjoy yourself. To be one it requires quite a bit of work and you will do well to hire some professional help like a good debt lawyer or a company, which specializes in the repayments and settlements of debt consolidation loans. They will charge you a fee but you will not have to bother about anything.
When You Should Consider a Debt Consolidation Loan
If you have found that your debt has gotten a bit out of hand, you may be considering a debt consolidation loan. Debt consolidation loans are loans that you may qualify for that will take all of your existing debts, such as mortgage, credit cards, small business loans, store cards or any other debt you may have and lumping them all together. Sometimes all of your other debts or many of your other debts will be repaid on the spot, but you will need to pay off that debt consolidation loan instead.
Some of the reasons people may get debt consolidation loans is if they are looking for an alternative to bankruptcy, if they have a lot of high interest credit cards they are struggling with or if they are simply looking to save some money. Often times a debt consolidation loan can save $100s per month, which you can use in other ways.
In order to get debt consolidation loans, you usually have to have equity, such as a mortgage on a home. Not only is this sometimes a requirement of certain companies, but it could actually make your rates a bit lower, which can be quite an advantage. Depending on your personal situation, there may be rules or provisions on the loan as well. For instance, if you are facing bankruptcy and this may be the only option, the lender can and will discount the loan. There are, of course, other provisions as well, but many of them will be designed according to your own situation.
There are some things you should be cautious about when it comes to debt consolidation loans. For instance, using the example of bankruptcy above, if you end up choosing to get a loan for debt consolidation then still find that you need to declare bankruptcy or need to a few years down the road, you may not be able to, since you got the loan. Another concern with these types of loans comes when you consolidate debt that is unsecured into a loan where the debt is secured. Your monthly payments will likely be smaller, but the amount you have to pay back will be much larger.
What’s the true reason?
You also may want to consider the reasons you are consolidating in the first place. For some people, they have simply legitimately gotten in over their head due to loss of job or medical problems that have enabled them not to work. For others, they may have a problem with out of control shopping, for example. For these people, you should probably seek credit counselling first, before taking any drastic step like applying for a loan for debt consolidation.
If you think debt consolidation isn’t an option for you, there are some alternatives such as credit counselling as listed above. Other alternatives include credit card balance transfers and home equity loans. If you are not familiar with these options, seeking the assistance of a trusted bank or lender may give you a solid background on what they are and which of the choices may be best for your personal situation.
Things to consider
Well, debt consolidation companies can come to your help regarding this problem. Consolidating your debt also helps boosting your credit rating. But the question is, how to consolidate debt with bad credit? Here are 4 important hings to consider:
- GET PROFESSIONAL HELP: There is no doubt that professional debt-consolidation companies have a remarkable track record in helping people out of their arrears and relieving them off their worries. They handle all the pressures of negotiating with the creditors and forwarding your money to them. Your total amount to be repaid gets largely reduced and you just have to make a single payment each month. The creditors also agree because they know if you file for bankruptcy, they won’t get back anything at all.
- COMBINE: The process of consolidating debts is not very difficult. It involves consolidating or combining all your existing debts into one. And you have to make a one time payment each month, from where all your creditors get paid. By doing this, nor do you have to keep track of the different payment dates and moreover, you manage to rid yourself of the harassing and embarrassing phone calls of your creditors. Now they will be negotiating directly with the debt consolidation company.
- NEGOTIATE: But perhaps the most important feature is that your payments get reduced considerably. By combining all the debts together after the negotiations with the creditors, the payment that you make is considerably lower than what you would have had to pay if you tackled the debts separately. They handle all the future transactions hereafter and the creditors are also assured that they are definitely going to get back a part of their payment. Proper negotiation is the key to a perfect consolidation. However, you will not be able to negotiate them as well because they know the strategies of the market. This would take us to our next tip.
- BEWARE OF SCAMS: But there might be some scams in this kind of business too, so before you start making your monthly payments; you should enquire about the trustworthiness of the company. Or you may find that your money is not only reaching your creditors in the first place and you only come to know about it when the harassing phone calls from the creditors are renewed. In fact, you should check in yourself with the creditors in the first couple of months or so to see that the money has reached them and ask them to inform you directly, if they do not receive the payment any month.
Remember: proper negotiation is the key to a perfect debt consolidation.
However, such scams are very few and you might be fortunate enough to land with a really trustworthy company which will help you to lead a stress free life. Using these precautionary measures you would know how to consolidate debt with bad credit and safeguard yourself against any possible scams.
Hence, by asking for help from debt consolidation companies, you will definitely take a giant leap to pay off your debts. Keep in mind that consolidating your debt often helps to boost your credit rating.
Free Credit Counseling Services To Get Effective Debt Consolidation Plans
Most of the borrowers who apply for consolidate debt loans through a government agency might not be aware that these agencies are not completely backed by the government. While loans for credit card debt consolidation allow you to combine all your outstanding credit dues in to one single manageable monthly payment, firms that offer these are usually governed by the state rules and regulations. Remember, that the government does not provide funds to any financial institution but offers resources and thus, regulates the entire loan lending process of lenders who handle these loans.
Most of the borrowers who qualify for various debt consolidation plans misunderstand a government grant to be a loan. The main difference between the two is that any kind of grant need not be repaid. And grants are not that easy to get since, people who apply for this need to satisfy certain critical requirements and everyone may not qualify for it. Nevertheless, if you are planning to consolidate your excessive credit card debts with debt consolidation loans through specific government grants, it could be advisable for you to talk to your lender. This could help you to get valuable information on your low interest rate debt consolidation loan.
Today there are a number of agencies that offer consumer credit debt consolidation services online. Such firms may be funded by the government. In any case, most of such debt consolidation companies provide counseling services which are known as consumer credit counseling or at times debt management help. Normally, such assistance is aimed at providing help to borrowers in managing their debt situation much better and thus, prevents them from incurring any additional debts. Above all, such a company even enables you to rebuild your credit rating which has been badly affected by increasing unsecured credit card or bill debts.
But it is always desirable to use free nonprofit credit counseling services when you out to consolidate your excessive credit dues. Additionally, you also need to ensure that the firm is reliable as well as reputable. This could be essential as these days many companies are into fraudulent practices. Organizations, which work on a nonprofit basis, could receive financial funds from different sources and some in a few cases; the state government might offer monetary grants which serve as the instruments in funding debt consolidation loans. Alternatively, there could be some private companies that are easily accessible online. Usually, such firms have their own resources for helping borrowers.