How credit consolidation works
There are several ways to consolidate your credit debts. First, you could get a debt consolidation loan from your bank or credit union. Naturally, you will have to be able to borrow enough money to pay off all your debts – otherwise, this would make no sense. Depending on how much you owe, it will be either a secured or unsecured loan. If you need to borrow a lot of money, it will most likely be a secured loan – or one where you have to pledge something as collateral. In most cases that will be your house, meaning you will need to get either a second mortgage or homeowner’s equity line of credit. No matter which of these you choose you will be risking your house because if you were ever unable to make your payments, your lender can foreclose on it and you would lose it.
Consumer credit counseling
A second way to consolidate credit debt is through consumer credit counseling. There are non-profit credit counseling agencies in most cities. If there is not one where you live, you can get credit counseling via the Internet. Whether you get the counseling in person or online, you will be assigned a counselor who will review all of your finances and help you create a debt management plan to pay back what you owe. This is like a debt consolidation loan in that you would end up making just one payment a month except it would be to the credit counseling agency, which then pays all of your creditors. In most cases, people are able to complete their debt management plans in about five years.
Transfer your balances
If your biggest problem is credit card debt, you could transfer all your high-interest credit card balances to one with a lower rate. Most of today’s credit card networks offer 0% balance transfer credit cards. If you qualify for one of these cards you could transfer all of your balances to the new card and pay no interest for anywhere from 6 to 18 months. This could be very helpful because the payments you would make on the new card during these months would go 100% towards reducing your balance to help you get out of debt.
Which would be best for you?
A debt consolidation loan might be your best option if you have the collateral necessary to get one – keeping in mind it may take you as long as seven years to pay it off. Credit counseling could be a good option if you don’t mind giving up all of your credit cards and if you have the self-discipline necessary to not take on any new revolving credit during the five years it will take you to complete your debt management plan. And a balance transfer might be a good alternative if you feel you can pay down what you owe on the new card in three years or fewer.
Debt settlement
A fourth alternative in credit consolidation that has become very popular over the past few years is called debt consolidation. In fact, our debt consolidation partners have helped thousands of families become debt-free much faster than is possible with a debt consolidation loan, consumer counseling or a balance transfer. They are so sure they can get you out of debt in a reasonable amount of time that they offer a simple 100% satisfaction guaranteed. If you would like to know more about debt consolidation and this guarantee, call our toll-free number and let us explain what we could do to help you