How to Best Use Your Debt Consolidation Opportunities

Sometimes, even when we try our best to manage our finances, debt problems can get in the way. Unexpected circumstances such as sickness, loss of job, divorce, or business failure can quickly put us in a bad debt situation. However, being in debt doesn’t have to be a hopeless situation. In this article, we’ll discuss how you can flee from debt through different types of consolidation.
Credit Counseling
Some credit counseling agencies would recommend a debt consolidation program for consumers with extreme debts. Finding a reliable credit counseling agency should give you the assistance you need in handling your debt problem. An experienced credit counselor should give practical and efficient advice on how you can create a repayment plan, avoid incurring new debts, and prioritize your repayment.
Debt Consolidation Loan
One way to consolidate debts is by obtaining a loan. The money loaned would be used to pay all your existing debts from different creditors. In turn, you’ll be subjected with only one lender – your debt consolidation company. Thus, the stress and pressure of dealing with different creditors is instantly eliminated. Furthermore, by consolidating debts into a single account, you won’t have to pay multiple interest rates so you can save more and use the money for repayment.
Debt Repayment Representative
A debt repayment agency can negotiate with your lenders to reduce your debts and modify your payment terms. Each month, you’ll submit your payments to your debt repayment agency- who in turn, would distribute your payments to the appropriate lenders. Nevertheless, it’s very important to make sure that you’re dealing with a reliable company and that all your payments are submitted accordingly.
Credit Repair Clinics
Watch out for agencies or even non-profit groups who promise to give an instant “fix” or instant “repair” to your debt problems. Remember that the only way you can get over your debt problem is by paying off your debts. If the charges in your account are accurate, there’s no way an agency can erase or delete these charges from your credit report. Even worse, these agencies who disguise themselves as “credit repair groups” may use your personal information against you.
Debt Settlement
A credit counseling agency may also negotiate with your creditors through debt settlement. Debt settlement can reduce your debts from 50% to 60% or even more. However, if your creditor agrees with a settlement, you are expected to submit your payment in full at the soonest possible time.