If you can't balance your income and expenses because of your huge debt, read on and find out about your choice of credit card debt consolidation.
Debt consolidation can be a good option when you find that your financial situation is out of control, but there are many factors you must consider before you go out and register for a debt consolidation loan.
1] Why do you want to consolidate your debt?
The basic principle of debt consolidation is that you take out a loan and use it to pay off all your existing credit card debt, loans and overdrafts.
This usually results in lower payments usually being spread over a longer period of time. Before proceeding with debt consolidation, you should first consider whether there are better alternatives.
2] Selling assets to pay off debts
Instead of rearranging your debts and see if there is a way, you can repay some or all of your debts yourself. Sell unwanted valuables and other items.
Classified ads locally or through Ebay based on the items you can sell to your dealer. Sell unwanted books through Amazon. If your debt is very high and you own your own home, consider reducing the size to release the assets.
3] Pay the minimum amount of credit card.
If the amount you pay exceeds the minimum monthly amount, you should seriously consider continuing to use your existing credit card and pay off your debt within the next 12 to 18 months.
While this may mean limiting your spending in other areas, it will be the cheapest option in the long run. Of course, you can still choose to combine debts to make it easier to manage your debt.
4] Debt consolidation may be the right choice if you are currently only trying to pay the monthly minimum payment on your credit card, or if your credit card debt is increasing every month. When considering debt consolidation, there are many options:
5] Mortgage or re-mortgage
If you own your own home, you can repay your existing mortgage [if any] and enough money to pay off your other debt by purchasing a new mortgage.
If repaying your existing mortgage will result in a fine, consider a second mortgage with your existing lender. The interest charged may increase slightly, but it will not increase significantly.
6] Obtain a secured loan with another lending institution
If you have missed or late for any payment, and therefore your mortgage's credit score is too low, consider signing a secured loan with another lender.
In this case, the secured loan is more expensive, and if you miss the payment, the lender can quickly recover your home. If you are sure you can repay, you can only use this route.
Depending on how bad your credit history is, as long as you keep all payments for the next 1-3 years, once your credit score improves, you can use a mortgage or mortgage to offset the loan. If you repay the secured loan in advance, you will be punished. Make sure you read the rules.
7] Loans secured by other assets
If you have expensive cars, boats or planes, you may be able to use these assets as a guarantee to get financing. The interest rate will be higher than the property-guaranteed loan. If you don't have property or are fully mortgaged, you can choose to get a loan for another asset.
8] Unsecured loans
If you don't have property or other assets, you can usually get an unsecured loan. Unsecured loans are usually short-term loans, usually up to 7 years, but sometimes even longer. Therefore, monthly payments will be higher, but debt will be reduced rapidly.
Since the lender has no guarantee, if you default, your risk of property and assets will decrease. However, if a court order is obtained, the lender can dispatch a bailiff.
Because there is no security expectation to pay higher interest rates, especially if your credit history is not good.
9] Don't forget the credit card option.
If your debt is reliably low and you still have a reasonable credit history to apply for another card with a 0% or low interest balance, you can replace the debt consolidation loan.
If you can actually repay all or most of the debt during the 0% balance transfer period, you can make a 0% balance transfer. However, if there is still a large amount of debt at the end of the balance transfer period, there is a permanent low interest rate.
Please note that a balance transfer may charge a 2-3% fee. To make sure you don't get back into debt, you can cut all your credit cards and close your paid accounts.
10] Check all options before making a decision.
When you study all the options, if you have an obvious solution, it will soon become clear. For many people, there will be more choices, so they must be checked before making a final decision. Go to a range of different lenders and mortgage brokers and get the best package. Remember that you have the final say, just asking that you won't be allowed to take any action.
For many people, debt consolidation provides an ideal solution for excess credit card debt. Solving the debt problem requires a little time, energy and determination. Once you classify your debts, you will find life more enjoyable and relaxing. There is no pressure on debt collectors to contact or contact you by mail or phone.
Orignal From: 10 steps to successful debt consolidation
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