Talk to a debt counselor toll free:

(866)935-6007

Debt Consolidation

Debt consolidation is one of the popular strategies that you can use to quickly pay off your debts. Let us help you by combining all your outstanding loans into a single loan with lower interest rates!

When you do that, you make only a single payment each month, usually at a low-interest rate. That way, it becomes less of a burden, giving you the confidence boost to clear your debt once and for all.

Primarily, there are two options to take note when it comes to debt consolidation:

  • Secured Loans
  • Unsecured loans

The secured loans use your properties like your home as collateral. That means if you don’t keep up with your payments, you could lose your home. However, when you have collateral, there’s a high possibility that you’ll acquire the debt consolidation loan at a low rate.

On the other hand, the unsecured loan doesn't require any collateral, so there's no need to concern yourself about losing your home. That is, if you don't make on-time payments each month. However, you'll need to have a high credit score to be eligible, and that's one thing people with huge debts usually struggle with.

There are various ways to get out of debt, and consolidating your debts is one way to clear your debts. Here are some of them:

  • Get rid of your debts by yourself.
  • Try debt settlement.
  • Make a balance transfer.

You must understand the process involved in each. With such knowledge, you'll know the best debt relief option that's right for your circumstances.

Get Rid Of The Debts Yourself

There is lots of information that seems to suggest you can't get out of debt yourself. That's not true. A lot of people have done it, so can you. You just need a little guidance on where to begin, and the courage to stick to a plan, and patience to go through the entire debt relief journey.

To pay the debts yourself, you need to tackle one loan at a time. You can start by addressing the credit cards with a high-interest rate while making your regular payments on other credit cards. This method is called debt stacking, and many financial experts recommend it.

However, as stated earlier, you need patience because paying off the credit cards can take a long time, especially those with high rates.

The second way to clear your debts is a method developed by Dave Ramsey, called the debt snowball. Here's how the debt snowball works. Arrange all your credit card debts in an orderly form, from the lowest to the highest. Then start by paying off the debt from the smallest debt.

When you pay off the lowest debt, you will have extra money and the momentum to pay the second-lowest debt. You follow the same process until you complete all your debt payments. A lot of people have used this method and worked for them.

However, it requires discipline to stick to the plan, and you may need to get an extra job. In short, in your repayment period, you may need to make some sacrifices until you clear your debt.

Try Debt Settlement

The second way to be free from debts is through settling your debts, which can be better than balance transfer or debt consolidation. The debt settlement can significantly decrease your debt amount, making it easy for you to pay them off.

The first step is to call your creditors, each of them, and make a deal by offering a considerable sum of money as a settlement to your debt. But you'll do so at less than the amount you originally owe. Let's take an example to make it easy to digest.

If you have $7,000 on your credit card debt, and you contact your lender and make a considerable offer of $4,000 to settle your debt. If you can have evidence that you're in a deep financial struggle, the company may accept that lump sum.

However, you may need to provide evidence in the form of documentation to prove your case's authenticity. You also have to include every debt you owe, the specific amount required of you to pay for each debt, and the last monthly payments you made on any of them.

Also, you may need to include all the details of your earnings and assets. You need to show them that there's no way you can pay back your debts. And if they are not able to help, your last hope may be filing for bankruptcy.

In the worst-case scenario, you could let them know that you have no option but to file for bankruptcy if they don't accept the offer. Sometimes, it can be a powerful way of negotiating, and it turning into your favor.

If you want to settle the debt yourself, you need two other qualities:

  • You need to be extremely good at negotiating.
  • You need to have real lump sum cash ready to make the settlements.

What Are You Still Waiting For?

You do not take any risks or obligations for our services. You do not need to make payments beforehand, and we offer a 100% refund if you are not satisfied with the service. As we value honesty, transparency, and customer attitude toward our services, we hope you do not have any question marks in your mind by now. However, if you are still confused and worried, contact our experts now and direct your questions or concerns.

Make A Balance Transfer

If you have several credit cards with high rates, you can balance transfer to a low or zero rate card. If you transfer a credit card debt with a 17% rate to a new card with a 10% rate, your monthly payments will decrease. And the debts on your credit card will reduce.

It’s better to transfer your debt to a card that has a zero interest rate. That way, you’ll not pay any interest within 6-18 months. You can increase your payments for each month during the free period and get out of debt before the period ends.

Even if you're not able to pay all, you would've paid substantial amounts to get you out of debt soon. But should you choose this option, we recommend that you go over the terms and conditions before proceeding with the sign-up.

That’s because the transfer fee could be so high it can clear off the savings you would acquire if you transfer your debts. Also, find out the interest rate you’ll have after the free period ends. You could have an interest rate high up to 19%.

Ideally, that wouldn't be a problem if you paid off all your debts or if the remaining loan debt is appreciably low. If not, then you could fall in the debt zone again.

Acquire A Debt Consolidation Loan

You can use a debt consolidation loan as a gateway to debt relief. If you have a house or there’s equity in it, you can acquire a Homeowner Equity Line Of Credit (HELOC) or home equity loan. With that, you can use the earnings from the loan to get rid of any other debts.

You'll only make a single payment each month, which is significantly less than all the total debt payments you make. The reason behind it is that the interest rate on the HELOC or home equity loan will be low compared to the interest rate on the actual debt.

For example, if your credit card debts have a 17% interest rate or more, consolidating them into a home equity loan can decrease the interest rate to 5% or less. Also, the HELOC can have a lower rate.

If you don’t have a home yet or that much equity, the unsecured debt consolidation may be the best alternative.

That means, you don't need collateral to secure a loan. However, it may come with a higher interest rate, which can be an issue if you're already in deep debt. Keep in mind to have a good score credit so that you'll have a low-interest rate.

The Common Disadvantage Between Debt Consolidation And Balance Transfers

The downside to both balance transfers and consolidating debts is that it doesn’t decrease your loan debts. If you consolidated $30,000 or transferred $30,000 to a different credit card with a low rate, there will still be $30,000 to pay.

And even though consolidating your debts comes with better low-interest rates, the cost incurred will be massive in the future. The reason is that it takes too much time to pay off your debt. Home equity loans can take 30 years, while HELOC typically takes seven or ten years.

If you compare them to the snowball method, you could clear all your debts in three years or less.

Debt Consolidation Vs. Debt Settlement

Consolidating your debt and debt settlement are both financial ways people can use to get out of debt, if the debt is too much than they can carry. However, most people confuse the two terms, which usually leads to confusion.

Consolidating Your Debt

When you consolidate your debt, you combine all your debt into a single loan. Every month, you make one payment to the new loan, instead of making payments to several lenders. It makes it easy for you to repay your debts and also comes with low-interest rates.

The Danger Of Repeating The Same Mistakes Again

People who have not been disciplined and diligent in clearing their debts run the risk of repeating the mistakes. Sometimes, even making it worse than before.

In reality, when you consolidate your debt, you only move your loan debt into a different form. And even though there is a low interest rate and repayments, it will still take considerable time before you pay off your debt.

Usually, when people consolidate their loans, they get back into debt, and if they don't change their habit of spending, they could be in serious trouble. If you don't know how to budget and manage your finances, consolidating your debt may not help you.

Most people depend on credit cards when they overspend their monthly income, hoping to bridge the gap. They usually find themselves right back where they started - drenched in debt.

Debt Settlement

Settling your debt means agreeing with your lenders to pay a specific massive sum of money but less than what you owe. You can use this method if your debt is significantly high. There are some disadvantages associated with debt settlement.

Additional Fees

Usually, debt settlement firms will advise you not to make any payments to your lenders while they come to a settlement with your creditors. However, they will add any additional fees, penalties, interests, etc. that occur to the debt you already owe.

Final Thoughts

TConsolidating your debt can help you get out of debt, but you need to analyze your situation before proceeding. Otherwise, you could incur more harm than good. If you realize that debt consolidation is not ideal, there are other alternatives you can try out.

If you have any challenges, don’t hesitate to contact us. Our team of experts is always ready to assist you anytime. Our priority is to help you get out of debt and gain your financial freedom again. So don’t stop, call us now.