Types Of Debt Consolidation
There are several avenues open to consolidate debt, including a debt management plan home equity loan personal loan credit card balance transfer and borrowing from a savings/retirement account.
The route you choose should be based on research and whether the solution offered fits your budget and time frame. Your credit score and debt-to-income ratio are factors, if you choose to get any kind of consolidation loan. You many also choose to pursue online debt consolidation.
Here is a quick look at each option.
General Reasons For Consolidating Debts
People choose debt consolidation for many reasons but the most popular include:
- Reducing Interest Rates: Interest rates for mortgages are generally lower than that for other kinds of debts.
- Reducing Monthly Rates: By spreading out a loan over a long time, you end up paying lower monthly instalments.
- Improving Credit Score: If you have pending debts, they are certainly affecting your credit score. A debt consolidation loan is a great way to improve a poor rating by paying off expensive loans.
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Debt Consolidation: Debt Consolidation is one of the most commonly misunderstood and misinterpreted personal finance strategies that consumers frequently inquire about. While some view it as a method of taking on new loans, others see it as a debt relief alternative. It is more important than ever for inquisitive consumers to have a very strong understanding of exactly what debt consolidation entails, and the impacts it can have on personal finances.
Debt Relief: Debt relief is defined as a partial or total forgiveness of debt. When the term is used by the government, it sometimes refers to the forgiveness of debt to underdeveloped countries. However, it is also used to refer to the millions of consumers who are overwhelmed with debt seeking financial relief from their unsecured debt.
: Credit card debt is an example of unsecured consumer debt, accumulated through credit cards. Debt results when a client of a credit card company purchases an item or service through the card system. Debt continues to accumulate and increase via interest and penalties when the consumer does not pay the company for the money he or she has spent.
Debt Settlement: Debt settlement programs use a third party to negotiate lower balances and interest rates on unsecured debt. This type of debt management plan helps provide consumers an alternative to bankruptcy while simultaneously reducing your outstanding debt.
Debtmerica Website Disclaimer: Last Updated as of February 24, 2021
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Your Choices And Goals
No matter which method of debt consolidation you choose, remember the goal is to get out of debt and stay out of debt. Sustained behavioral changes, such as planning and sticking to a budget, saving up money to pay for large purchases and focusing on needs rather than wants, will help you reach your financial goals.
Our Financial Freedom Plan Can Help You Become Debt
The Financial Freedom Plan is a proven method for helping people become debt-free using the power of debt settlement.
Debt settlement is an agreement with your creditors to pay off your debt for less than you owed. While the concept is simple, it takes a lot of work and experience to know what debts can be settled and when the settlement offers are in your favor.
To successfully settle your debts, youll work with American Debt Relief by making monthly deposits into a savings accountusually at a lower monthly payment than your minimum payments to creditors had been. The money you save is used to negotiate settlements with your creditors for significantly less than you originally owed and pay our service fees.
While youre saving, well monitor your progress and work with creditors to reach a settlement. It usually takes several months before creditors are willing to negotiate seriously. Once a settlement is reached, you pay off the lower debt amount! And youre moving ever closer to living a debt-free life.
Please keep in mind that debt settlement is not a solution for secured debts like a mortgage, auto loan or home equity loan. Youll need to consider other options such as debt consolidation or credit counseling to help you get the debt-free life you want.
Settle your debt.
As you make your monthly payments, and we negotiate a settlement, youll pay off your debts and be on your way to a debt-free life.
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Consumer Debt In America
Estimated read time:1minutes
From credit cards to mortgages to auto and student loans, personal debt in the United States is slowing creeping closer to its 10-year high back in 2008.
Data from the Federal Reserve Bank of New York.
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How Debt Consolidation Can Improve Your Finances
Everything goes on sale eventually. From groceries to clothes to school supplies to household items, youll never have to pay full price for anything if you only buy things when prices are low.
Shopping sales work! If you are organized enough, you can stock up when things are on sale and buy things in advance. The amount of money you can save if you do this properly is astounding. Think about kids shoes- kids go through shoes so quickly. When shoes go on sale, they can be half-price, and you can easily save $10 or $20 on one pair of shoes. Target and Old Navy have awesome savings on clearance. If you are buying a few pairs of shoes, you can easily save $20-$50 on shoes alone!
While some consider it a risky strategy, many financial gurus recommend using debt consolidation to improve your finances. By consolidating your debt, you can save money on interest and fees and get out of debt faster.
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The Va May Be Able To Help With Consolidation
You may consider consolidation as an option for managing debt. Generally, consolidation is when you take out one big loan to cover all of your existing debt, leaving you with one loan to repay, usually with a lower rate. The Veterans Administration does not specifically offer a debt consolidation loan, but it does offer a type of home refinancing that is often referred to as one. If you own a home, this could be an option for you. It may be a long process, since the VA will appraise your house to make sure that including additional debt in a refinancing wont cause your loan to exceed the value of your home. As with any major financial decision, its a good idea to discuss options with a financial advisor or your lender.
I Dont Have A Credit Profile How Do I Get Started
Your are about how you use your credit â money that’s loaned to you by a bank, a credit card or a loan.
Start small and secure. Secured credit cards or loans are accounts where you’re getting credit, but it’s tied to a cash deposit that the lender can easily collect if you don’t make your payments. This can be a great way to start building your history. If you pay your secured card on time, eventually you will be able to qualify for unsecured credit.
Another option might be to co-borrow with a person who has established credit history. It’s common for younger adults to co-borrow with their parents who have a longer credit history. Or if youâre a new American resident, you might have a relative who has lived here longer co-sign for you on a loan or credit card to help you get established.
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We Are A Team Of Experienced Professionals Who Are Dedicated To Helping Individuals And Businesses Overcome Their Debt Struggles And Achieve Financial Freedom
Our team has a deep understanding of the various strategies and solutions available for debt relief, and we work closely with our clients to develop personalized plans that address their unique needs and circumstances. We provide guidance and support throughout the process, and we are committed to helping our clients achieve their financial goals.
In addition to our expertise in debt relief, we also have a strong background in psychology and understand the mental and emotional challenges that can come with struggling with debt. We provide a supportive and non-judgmental environment for our clients, and we help them overcome the mental barriers that can prevent them from taking control of their finances.
If you are struggling with debt, we encourage you to contact us to learn more about how we can help.
Contact A Credit Professional
When its the best option: If youre behind on payments and need guidance on your available options You may have maxed out preliminary measures like borrowing from family and friends, and collections agencies are calling.
What it looks like: Because every situation is unique, talking with a credit counselor can give you clarity on how best to tackle your debt. The counselor may negotiate with creditors on your behalf to lower interest rates and waive fees, and they may help you figure out how to rebuild savings. If you decide to enter into a formal debt management program, you may make one monthly payment to the company managing your plan, and they may dole out payments to your creditors.
Average credit card debt for Americans
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How Debt Consolidation Loans Work
To start consolidating debt, apply for a personal loan through your bank or another lender. Once your lender approves you for a debt consolidation loan, it may offer to pay off your other debts automaticallyor you will take the cash and pay them off yourself.
After your pre-existing debts are repaid with your new debt consolidation loan funds, youll make a single payment on your new loan every month. While debt consolidation often reduces your monthly payment, it accomplishes this by extending the loan period of the consolidated loans. Debt consolidation also streamlines payments and makes it easier to manage finances, like having a single monthly payment due date.
How Long Does It Take To Get Approved For A Consolidation Loan
Approval turnaround times typically vary per institution. For example, some online lenders may approve your loan within a matter of minutes, while banks may take a few days or up to a week to process. Once your loan is approved, funding can arrive within 24 to 48 hours or up to one week, depending on your lender.
Also, keep in mind that once you are approved for a debt consolidation loan, it might take several weeks to pay off your existing debts, depending on the lender. They will likely still hold you responsible for any payment due dates within that waiting period.
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Tax Negotiation & Mediation
Many individuals and families cannot afford to pay their income tax bill. If you find yourself in this situation, you have options that may be able to ease your financial burden. You may be eligible for an installment agreement, an offer in compromise or a temporary delay of payment.
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Does Debt Consolidation Work On A Limited Income
Debt consolidation can be difficult for people on a limited income. There must be room in your monthly budget for a payment that at least trims the balance owed. Even with a limited income, however, there can be places where you reduce expenses — dont eat out eliminate cable and other entertainment spending no trips to clothing stores — to make debt consolidation work. It may come down to how committed you are to eliminating debt.
Your Success Is Our Success
Through the power of our Financial Freedom Plan, American Debt Relief has helped people like you become debt-free for over 12 years. As one of the top debt relief companies in the country, weve helped thousands of customers settle over $1 billion in debtat a fraction of what they owed.
Because weve done it so effectively for so long, we know how to provide the personal service you deserve and expect. With our combination of client-centric service and debt resolution expertise you can:
- Keep more money in your pocket each month
- Settle your debt for significantly less than you owe
- Relieve stress and obtain the financial freedom you deserve
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How To Apply For Debt Consolidation Loans
While the process varies by lender, follow these general steps to apply for a personal loan:
- Check your credit score. Check your credit score for free through your credit card issuer or another website that offers free scores. This will help you understand your creditworthiness and qualification chances. Aim for a score of at least 610 however, a score of at least 720 will yield the most favorable terms.
- If necessary, take steps to improve your credit score. If your score falls below 610 or you want to boost your score to receive the best terms possible, take time to improve your score before applying, such as lowering your credit usage or paying off unpaid debts.
- Determine how much debt you need to consolidate. Once you check your credit score, calculate how much money you need to borrow to consolidate all of your debts. Remember, though, youll receive your money as a lump sum, and youll have to pay interest on the entire amountso only borrow what you need.
- Shop around for the best terms and interest rates. Many lenders will let you prequalify prior to submitting your application, which lets you see the terms you would receive with just a soft credit inquiry and without hurting your credit score.
- Submit a formal application and await a lending decision. After you find a lender that offers you the best terms for your situation, submit your application online or in person. Depending on the lender, this process can take a few hours to a few days.
Mid America Debt Relief The St Louis Debt Expert
Throughout the St. Louis area, individuals and small businesses overwhelmed by their debts have counted on Mid America Debt Relief for guidance and assistance. We have more than 10 years of experience in debt consolidation, management, negotiation, and resolution.
Our company is locally and family owned, so you always receive personalized attention. Same-day services are available, and we offer afree 30-minute consultation. To begin your journey on the road to freedom from debt, call today.
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How Does Debt Consolidation Affect Your Credit
Debt consolidation has a positive impact on your credit score as long as you make on-time payments. If you choose a debt management program, your credit score will go down for a short period of time because you are asked to stop using credit cards. However, if you make on-time payments in a DMP, your score will recover, and probably improve, in six months.
If you go with a debt consolidation loan, paying off all those debts with a new loan, should improve your score almost immediately. Again, making on-time payments on the loan will continue to improve your score over time.
The alternative DIY method is obvious: Get rid of your credit cards. Lock em in a drawer and hide the key. Pay for everything in cash. Set aside a portion of your income every month to pay down balances one card at a time, until they are all paid off.
Bank Of America Debt Consolidation
by Lizzy Bale
Because Bank of America is one of the largest consumer credit issuers in the United States, it tends to have its own way of doing things when it comes to debt consolidation. Remember, the bank doesnt want you to default on your loans any more than you do. If youre holding on to a large credit balance with the company and find yourself struggling just to make your monthly minimum payments, you can expect several things to happen.
As a first step, the company usually approaches its delinquent customers with an offer for a debt consolidation loan, which it frames as a convenient way to bundle credit balances from a variety of other issuers together with Bank of America debts. Such loans can appear attractive at first, but they are rife with drawbacks.
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Is Debt Consolidation Necessary
April 14th, 2022 by admin
With near everyone complaining about credit card bills they can no longer pay and mortgages they never should have taken out in the first place, it was just a matter of time before the debt consolidation industry took hold of the publics imagination. Most people finally seem to understand that, after 2005 congressional legislation, Chapter 7 bankruptcy no longer promises anything to ordinary consumers beyond increasingly dear attorney fees, and, if recent studies are true, our national obsession with unsecured debt continues unabated. An article in the Wall Street Journal announced that the average household now carries a dozen credit cards among their members with a total balance approaching eighteen thousand dollars. Honestly, if anything, it seems odd that Americans did not turn to the debt consolidation approach sooner. Once debts have reached a size and number that makes their speedy resolution untenable, it just makes good sense to examine whatever alternatives now exist. However, its one thing to take a look at debt consolidation and quite another to jump blindly into the first program sold by a glib professional promising the world. Debt consolidation may be a solution, but each of the various programs will contain its own share of dangers. More to the point, they certainly shant eliminate lifelong burdens without some degree of discipline on the part of the borrower.