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Debt Relief Tips To Stop You From Drowning In Debt

What is Debt Consolidation?

The process of combing various unsecured debts – credit cards, payday loans, personal loans, medical bills, etc. into a single bill is known as debt consolidation. So, rather than paying off 15 creditors individually each month, you combine all the bills into a single payment and only write a single check. This is what debt relief can do for you. This simplifies your life and helps avoid payment errors that can result in bounced check fess and late payment penalties.The three most popular forms of  Debt Consolidation are:  Debt Consolidation Loans, Debt Management Plans & Debt Settlement Programs. None of these options will provide you with a quick fix, however, they are designed for your benefit as long-term debt reduction strategies. Debt consolidation should bring reduced interest rates and monthly payments and long term credit score improvement.

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What is Debt Settlement?

A Debt Settlement Program will negatively impact your credit score but not nearly as bad as filing for bankruptcy. It is a cost effective way to resolve your debts. Professional negotiators attempt to settle your debts with your creditors and then create a payback of 2 to 5 years that you can comfortably afford. Once that payback period end, you would be debt-free! In order to enter a debt settlement program, your accounts must already be 3 to 4 months delinquent.

What Types of Debts Are Eligible For Debt Settlement?

The most common debts successfully negotiated through a debt settlement program are credit card and medical bill debt. Those creditors are unsecured and they understand that if you filed for bankruptcy, they would most likely get nothing. The last thing they want to do is force you into bankruptcy by being unreasonable. If a debtor shows that they are willing to enter a debt settlement program with a reputable company, the creditors work with you to restructure your outstanding balances and are willing to agree to a significantly reduced payment.

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Are Any Other Types of Debt Eligible For Debt Settlement?

Credit cards and unpaid medical bills are not the only debts eligible for debt settlement. Personal loans, auto repossession balances, utility bills, mortgage “short pay” balances, private student loans, apartment leases and cell phone bills are also eligible debts that can be submitted into a typical debt settlement program. There may be other types of debts available for debt settlement programs not listed above. 

Can I Consolidate Credit Cards On My Own?

If your credit score is good (700 or higher) then the ideal way you can consolidate your credit card loan is by applying for a zero-percent interest balance transfer credit card. The zero-percent interest is a preliminary rate that typically lasts for around 7 to 18 months. Every payment made in that period will go straight toward decreasing your balance.When the preliminary rate concludes, interest rates rise to around 13 to 27 percent on the leftover balance. Be careful, because balance transfer cards usually demand a transfer fee (typically 3%), and some even charge a yearly fees. Another means to consolidate your credit card balance on your own is by going “cold turkey. ” Stop using credit cards and paying with cash or debit cards as an alternative. After you have fully paid off your debts, you can then pick one credit card and be extra careful with its use.

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What Is Bill Consolidation?

The process of eliminating debt by bundling all your bill payments and reimbursing them with a single loan is referred to as bill consolidation. With this method, you only make one payment each month, which is a good idea if you have six, or perhaps even ten individual payments to make for utilities, credit cards, phone service, etc.If you combine all the bills into one amalgamated sum, the consolidated payment should have a reduced monthly payment and a lower interest rate. Any savings you have could best be used for starting a backup fund to help avoid any possibility of a future financial crunch.

How Would I Consolidate My Bills?

Bills and debt consolidation require persistence, patience, and some form of management skills. You should begin by collecting all your dues from things such as utilities, credit cards, medical and cell phone services. Add the aggregate sum you owe on the unsecured loan and then decide how much you can really manage to pay for each month while still being able to pay your basics like food, transportation and rent.When you have a number in front of you, choose whether a debt management plan, a personal loan or a debt settlement plan will give you the maximum chance to get rid of your debt. Realize that this procedure usually takes around 3 to 5 years, and there are no quick-fixes and no short-cuts.

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What Is A Debt Management Plan?

A debt management plan assists you in getting a cheaper rate of interest from creditors and lower or even waive late fee charges so you can comfortably pay off your monthly bills.  It is important to remember that making use of a Debt Management Plan will initially have a negative affect on your credit score.You would send a single payment to the debt management agency. The agency systematically divides the payment among your lenders. A debt management program will not work if you can’t keep up with your monthly payments. All it takes is one missed payment and your creditors can remove you from the program. This eliminates any benefits you’ve been granted and you can end up in the same or worse position from where you started.