Debt Consolidation Can Help Get Rid Of Pesky Bills
The use of debt consolidation can provide some relief for bills, but it is not a miracle solution to every debt or bill. Understanding the options that are best to consolidate and those that are not possible to add to consolidation programs will make it easier to find an appropriate solution to budgeting and financial planning.
Consolidating Credit Cards
The obvious bills that are easily consolidated in most programs or through consolidation loans are the high interest credit cards. Since credit cards have a higher interest than many other debts, they are often a good choice to add to any consolidation program. The goal of consolidating credit cards is significantly reducing the debt payments by lowering the interest charges, and potentially the balances as well.
While credit card debt is one option to add to consolidation, it is not the only bill that is appropriate to add to a program. Other types of debts are also appropriate for consolidating.
Consolidating Unsecured Loans
Unsecured loans are any debts like personal loans or revolving lines of credit that do not use collateral like a home or car to obtain the funds. Like credit cards, many unsecured loans are higher in interest than consolidation programs and loans can provide.
This means that the debts also make sense to add to consolidation measures if individuals are able to reduce the interest.
Unlike credit cards, these loans might not always have room to reduce interest. Someone who has an excellent credit score is able to take out some personal loans for reasonable rates initially, so while it is a possible bill to consider adding to a consolidation plan, it only makes sense if the interest rate is decreased.
Consolidating Medical Bills
Medical bills might seem like it should not add to a consolidation plan, but it is also a type of unsecured bill and, therefore, is appropriate to put in a debt relief program or consider adding to a consolidation loan. Medical bills are often very high and might charge added fees and costs for paying the amount late. By adding it to a debt relief program, it is possible to negotiate a reasonable payment plan that is much less than the late fees.
When using a consolidation loan to pay off the medical bill, it will effectively eliminate the debt to the hospital and allow reasonable payments with a lower interest charge than the initial late fees for medical expenses.
Consolidating Business Loans
Becoming an entrepreneur is a difficult task, and sometimes the business might fall through or the business is simply not yet bringing in enough income to manage the debt payments. These loans are often unsecured debts that a business owner who gives a personal guarantee of payment can add to the consolidation program.
Business debts are variable in whether they are appropriate to add based on the personal responsibility to the lender. In some cases, loans for businesses are not taken out the in business owner’s name, but rather in the company name. Depending on the scenario, it might or might not be appropriate to add the debt.
Consolidating Tax Debts and Bills
Any debt or bill that is owed to the IRS or the state tax department is not possible to add to a consolidation program. The government has the ability to garnish wages, seize tax returns and use other methods of obtaining the funds without needing to worry about the loss of payment. It is not possible to negotiate for a settlement or lower interest charge through a consolidation company or settlement business.
If it is simply not possible to pay for the tax debts or bills for any reason, such as a pay cut at work, the best option is seeking help from a tax professional. It is not possible to add to consolidation for debt relief.
Consolidating Student Loans
Student loans are also not an option to add to any consolidation program unless it is unsecured. Any federal loan is set at a reasonable fixed interest rate to help students manage the payments each month. Not only are federal loans fixed at a low interest rate, the government has a wide range of potential helpful measures like paying according to income and ability, so it is not an appropriate measure to add student loans to the consolidation.
Consolidating Secured Debts
Secured debts like a mortgage or car loan are not possible to add to debt consolidating programs. The loan is already secured with property, so the lender has something to seize if the loan goes into default.
While many bills can end up part of a consolidation plan, it does not apply to every debt. As a general rule, any debt or bill that is unsecured can become part of the program. Debts that are secured, tax related, utility related or that relate to lawsuits are not possible to add to debt relief programs.