There are different options available to help elevate the problems when debt is a major factor. It is possible to look at what you are spending and reduce you outgoings by creating a budget. A drastic option is to file for bankruptcy. An option that you might not have considered is debt consolidation.
There are only certain items that you can consider debt consolidation with and these are normally credit cards or a personal loan. It is also possible with some utility bills as well. It is not a typical option for car loans or mortgages. To qualify you will need to prove that you have a regular wage to pay for the new finance, there might be other criteria but the refinancing company will go through these with you. By having assets like a home might help getting you a better deal, but it is not a necessity.
How to consolidate your debt, you first need to work out how much your original debts are. You need to add up all the balances, write down all the totals and then add them together, this total is what you are looking to borrow, or consolidate. Make sure you include all debts. The finance company might pay off the debts for you or give you the money, but you must use this to pay off your debts. You will then have just one loan repayment to make each month.
It is possible to lose control of debts as they incur late charges coupled with high interest rates and can seem impossible to break free. Some companies offer variable rate loans or fixed rate, with a variable rate the payments could go up as well as down, with a fixed rate it will stay the same during the course of the loan. By debt consolidation it is possible to end this cycle and start afresh, by having one payment, which is normally lower than credit card interest rates. This will put you on the first step to being back in control.
Any debt that you had will all be paid off and as long as you pay your new loan amount on time every month, having a consolidated loan won’t affect your credit rating. By having one loan which you pay off each month will help to repair any damaged caused before you consolidated your debts. But you will need to be careful with any credit cards so that you don’t spend on them unless you can afford to pay off each month, otherwise you will be back to square one.
It is possible to get some extra help after debt consolidation so that you do not fall back into the same trap where debts start spiralling out of control. The idea is to give you some tools to help, these can be teaching you how to manage a budget or prepare you for future financial planning.