Debt isn’t fun for anyone, and the deeper you get, the more depressed you can become. Many people struggle to find ways to make the money to pay their debts. Rather than drown yourself in negativity, continue on and learn about ways to help you through debt consolidation.
Before going with any specific debt consolidation company, check their records with the Better Business Bureau. There are a lot of sketchy “opportunities” in the debt consolidation business. It’s easy to go down the wrong path if you aren’t careful. The BBB and its reports can help you weed out the bad from the good.
Find out whether a debt consolidation company will take your unique situation into account. A one size fits all approach generally does not work when it comes to these kinds of financial matters. You want to work with someone that will take the time to determine what is going on with you and figure out how best to address the situation.
Be careful with the terms of collateral for any debt consolidation loan you apply for. Many times these types of loans will include a clause about your home, should you default on payments. Obviously, this could put you at serious risk should circumstances make meeting your loan payment difficult. Keep your home out of any loan agreement, and read the fine print.
Find out how the debt consolidation company is funded, and do not do business with them if they refuse to disclose this information. If they say they are a non-profit organization, make sure to check with the state to see if that is true. Also, if they say they are tax-exempt, check that out too.
If you have several credit cards, try merging all your accounts into one. You can save a lot on your interests and charges if you make one large payment once a month rather than sending money to different credit card companies. Managing your debt will be much easier if you merge your accounts.
It is possible to take money out of retirement to pay a particularly draining debt. It’s crucial that you pay back any money to your fund that you take out, though. If you do not pay the amount back, you will be charged a penalty and will be required to pay income taxes on the amount.
Are you able to refinance your home? If so, you can do so and take the extra cash at closing. Eliminating your debts can be done quickly this way if you have equity in your home. This is a great way to “reboot” your finances, but you must act responsibly for this to work.
If you cannot borrow money from anywhere else, a family member or a friend may be willing to help you out. Make sure you borrow only what you need, sign a loan agreement and stick to it. It is a bad idea to ruin a personal relationship if you can avoid it.
When in debt, you can make bad choices. Now, this unnecessary – and sometimes tragic – step can be avoided. You are well versed in how debt consolidation can help, so start using this advice to better your situation.