In the present economic scenario living within one’s means is something that only a handful of people achieve. A majority of the population find themselves struggling to make ends meet.
If you are in knee deep in debt, and not able to cope with your loan repayments, the time is right for you to consider about debt consolidation. Debt consolidation for bad credit is something that has to be handled with care.
Though many financial institutions and credit unions do no give you loans for people with poor credit, consolidation loans for people with bad credit does exist. Even if poor credit can make you desperate and pressure you to take the wrong path, choices are still open for you in spite of your finances and credit situation.
Considering Debt Consolidation For Bad Credit:
The decision of taking up consolidation as the right solution for your problem should be taken with care. Though consolidation is advertised as the only means to solve your credit issues, there are several people who have managed to pay off the bills and save money and time in the process without consolidation.
But if your situation is a desperate one, and you find no other option open for you, bill consolidation can definitely aid in relieving you of your debt and keep your finances out of trouble. Planning for a better financial future is made possible when you opt for it.
About Debt Consolidation And Its Advantages:
Debt consolidation in simple terms denotes the use of debt assistance programs, which combine several payments, loans or debts so the interest rate and consequently the monthly payments are reduced.
With a debt consolidation loan, it is possible to merge all the unsecured loans and the credit cards into one loan. This merger enables you to manage debt easily.
The monthly payments are reduced due to the lowered rates of interest. This saves you money on the interest and the repayments period will also be shortened as a result.
When you take up the appropriate debt consolidation, you can safeguard your credit rating with the reduced interest rate and monthly payment that result because of the consolidation.
What Options Do You Have?
To tide over the debt situation you are in, merging the debts to a single large loan or getting a secured loan on an asset is not a wise choice. This is because a single large sum is used to cover all your loans.
But if the new loan is a secured one and you have used an unsecured debt as collateral for your asset, this will get you a fixed and reduced rate of interest that is paid in one single payment every month.
Debts You Should Consider For Consolidation:
The credit cards, store cards and all the unsecured type of personal loans can be consolidated. But most banks do not offer unsecured debt consolidation, if your credit record is poor.
A history of delayed payments and a bankruptcy situation are other factors that work against you. Defaulting on any loan repayments, lack of regular income also come under scanner and can prevent you from getting approved.
But there are some banks that allow you to consolidate your loans and debts, so you can save on the interest, reduce the monthly payments you make and also get your credit back on the right track.
Mortgage refinancing, agreement of personal insolvency and debt agreement are some of the methods employed by the banks to consider a consolidation, even if you have a poor credit.
There are debt consolidation companies, which also offer loans but you need to ensure that they are legitimate and reliable before you get their assistance.
Alternative Methods:
Other than opting for the debt consolidation loans there are options like:
- Debt management plan – This service allows you to pay your debt within a span of 5 years. The reduced rate of interest will let you save a considerable sum of money.
- Debt settlement – This is for those who are not able to pay the monthly charges and want to avoid bankruptcy. A small sum that is possible is paid to the settlement provider who deposits it in an escrow account. The provider involves in negotiations with the creditors and reaches an agreement that reduces the outstanding payments you owe. The money is then paid to the creditors.
Improving Credit:
When you are working on your financial crisis with the debt consolidation or the other alternatives, you need to also look at the ways to improve your credit situation.
Regular timely repayments and doing a down payment to reduce the debt are ways that provide relief. Avoid opening new accounts as they worsen your credit and plunge you into debt faster.
Keep track of the payments and monitor any changes that occur on your score regularly. This will keep you informed and help you, while you apply for the loan.
Dealing with your debt need not be a difficult task. Though you may need some stringent measures and changes in your lifestyle, the payoff in the long term is definitely worth it. Considering debt consolidation such as Lexington law credit repair will give you the opportunity to correct your finances and move forward in life.
Images courtesy of FreeDigitalPhotos.net
It’s so easy to get into debt and so hard to get out of it. I think debt consolidation companies can help because they are giving you outside advice – you don’t have to do it all on your own. But you have to choose the right company.