What You Need To Know About Debt Consolidation

Financial burdens come in all shapes and sizes. You could owe a ton for a student loan, your mortgage or credit card debts. Regardless of what you spent the money on, it has to be paid back. When you are struggling to do that, debt consolidation may be the answer you seek.

One sign that a debt consolidation company is reputable is whether or not they are a member of an organization, like the National Foundation for Credit Counseling. Even if the company verbally confirms to you that they are a member, make sure you still research it to make sure what they are saying is true. A member of an organization like the NFCC has to follow certain rules, like only employing certified credit counselors.

When consolidating debt, consider doing the footwork yourself. Consolidation companies may have fees associated with their services. However, you can easily make the same phone calls to your creditors and negotiate with them. There is no special consideration from the creditor about who calls, whether a service or you, the customer.

Before you get your debts consolidated, see what your credit report looks like. The first step in debt elimination is understanding its origins. Determine who you owe and how much you owe. Without this data, it will be hard to restructure your financial situation.

If you own your home, consider taking out a home equity loan. Since the interest on these loans is tax-deductible, you can save money in multiple ways. Provided you are able to get a good interest rate, this is a smart way to consolidate your debt into one monthly payment.

Consider borrowing from your retirement account to pay your debt off. Contact the financial institution you opened a 401K plan with to see if you can borrow part of the money you saved up. This is a good way to pay your debt off quickly but you will have to replace the money you took from your retirement plan.

If you have life insurance, you may be able to borrow money from the policy to help pay for your debts. The money borrowed is taken from the amount your beneficiaries will receive upon your debt. Many borrowers pay this money back so that their funeral expenses are covered.

It is important that you read the fine print of any debt consolidation loan before agreeing to it. For instance, let's say you get a home equity loan. Should you default on this loan, your lender can take your home from you. Prevent this from occurring by reading the fine print.

Bankruptcy is an option for some who might otherwise consider debt consolidation. Any bankruptcy, whether Chapter 13 or 7, will leave a lasting ding on your credit reports. However, if you are missing payments and unable to pay off your debt, your credit may already be bad. You can get your financial house in order by clearing the decks and starting fresh with a bankruptcy.

Know what you're getting into. This is critical. Before you sign up for any debt consolidation program, be crystal clear about the terms. Not only that, but if you've taken out a debt consolidation loan, make sure you are sure that you got the best loan rate available. Find out as much as you can.

From money you owe for medical bills to that which you have accumulated from shopping sprees, debt needs to be paid down quickly before it becomes overwhelming. It is your job to seek out an answer to your problems. This article has shown you how debt consolidation can help, so make use of it today.