Free Debt Consolidation. What are My Choices?
Are your bills
getting too much for you? Does the idea of paying ten, twenty, sometimes even
thirty or more bills a month stress you out? Do you hate to open the mail box
for fear of seeing yet another credit card bill? Do you hate answering the phone
for fear of being harassed by yet another bill collector trying to collect on
a card you maxed out over a year ago? Debt consolidation may be the option for
There are two ways in which to approach debt consolidation. One option
is a debt consolidation loan. The other option is to hire a debt consolidation
counselor. Both have their benefits and their down sides.
The first option
that will be discussed is the debt consolidation counselor. Usually you can simply
call them and do everything over the phone. Some bigger cities actually have walk
in offices that specialize in debt consolidation. Either way, the process is basically
the same. The counselor will get a copy of your credit report from all three major
credit bureaus. These reports contain all your credit information including loans,
credit cards, merchant accounts, rentals, NSF checks, and many other financial
things. The counselor will then add up all the bills together to get one total.
Then he will break up the total into monthly payments that can be paid on for
usually three, five, seven, and in some cases ten years, depending on how much
your debt is. Sometimes a service fee is charged, and depending on your terms
of service, late fees. This is usually done interest free as long as you are on
time with your payments. Sometimes collateral, such as a house or business is
required for them to offer you an interest free term. Many times collateral is
not required. Each counseling service is different. You just have to shop around
and see what the best option for you is. The only bad side to this is that it
takes time for all of your debt to be paid. If you would prefer to have all your
debt paid at once, a debt consolidation loan may be right for you.
option is a debt consolidation loan. This option is very common among home owners.
You basically do the same thing the credit counselor does in the since that you
have to get a copy of all three credit reports and tally up all your debt. You
then take out a loan against your home and use the money to pay off all your loans,
credit cards, and other debt. You then only have one bill each month to pay. The
benefit to this is that all your credit cards are paid off and this looks good
on your credit report. You can also, depending on how good your current credit
is, get a loan that is more than the amount of you debt for things like a vacation,
home repairs, etc. This option also gives you the ability to shop around top get
the best deal from banks. Some banks run specials, especially after Christmas,
of no interest loans. As long as you don't fall behind on your payments, your
interest rate won't change.