What is debt consolidation
You can find many debt consolidation non profit agencies out there to help people to face their worst financial situations. By hearing the word non profit agency many people think like these agencies will provide their service at free of cost. It’s not true. They will charge you bit for getting their assistance. They will negotiate with your creditors on your interest rates and make them to cut so many unnecessary charges like over the limit fee on you.
This kind of negotiations makes a way for a revised payment plan. It will be designed depending on your income and other financial situations. Generally this revised payment plan is one of part of Debt management programs.
Free one to one discussion
Debt consolidation non profit companies will offer a free one to one session. In this initial meet the counselor will review your financial status and debts you owe. They will give you some guidance to prepare an income expense sheet to plan your budget in a smart way. Based on your income flow and other resources your counselor will tell you how much money you can allocate for loan repayment every month. Apart from this your counselor will take steps to negotiate with your creditor and reduces your interest rates. As a result your loan repayment term will be extended. They will make sure whether you have sufficient amount of money left with your hand to meet your daily expenses.
If your creditor agrees with the revised plan you can see a mark decrease in your interest rates.
Benefits of debt consolidation non profit
These companies have an ultimate aim to reduce your monthly debt repayment amount as an affordable one so that you can avoid the further debt. To keep you away from further debts in the future they will devise you a perfect budget plan and will freeze your credit cards until you become okay with your debt situation. They will talk with your creditor and skip out the late payment fee, high interest rates and annual membership fee. When these fees are getting eliminated from you, obviously your monthly debt repayment amount will be reduced.
Your counselor will see whether you need to enroll yourself with the Debt management programs or you can just pay off your debt by making some alterations to your spending behavior.
They will educate the clients on what is debt consolidation and how it can help them to reduce their burden of debt.
Debt management programs
In debt management programs your counselor will consolidate your 2 or more debts into one. So instead of paying 2 or more debts with the high interest paying credit card you can make a single payment at some low interest rate as they negotiated. When you make this single payment your counselor will separate it and sent it to the several different creditors.
Generally your debt consolidation collector itself will handle all the collection calls & communications just for you.
Buyer Beware
Many chances are there for the non profit debt consolidation agencies to scam the innocent consumers. As with all other concerns, you should be very careful while reading their terms and conditions. It is good to inquire with your family members and friends about the non profit debt consolidation companies. You can find the user views and rating at the better business bureau. Check out this information before sign up with any non profit and Debt consolidation programs.
Nope. Most charge inneasly high fees and most don’t work. You are only going to improve the situation by actually paying attention to your finances. If your situation is dire try Dave Ramsey. He’s hard core but his plan works but only if you grow up and get serious.
Yes. What happens is you pay off a batch of cards and even thgouh your total debt remains the same the fewer outstanding balances work in your favor.Also, you should be able to get a lower interest rate and with one payment you won’t have to play the games credit card companies like to play like how they credit payments or their interest rate adjustments.
Everyone is correct here, escpaielly the worries of the Advisor. If you’re transferring to a card that already includes a balance, this is a very bad idea. They will hold the transferred balance and require you to pay the balances in order of appearance meaning that all your payments will be applied to the transferred balance ONLY WHEN your higher interest current balances are paid in full. Transferred balances are almost always held until last.You’d be balancing on a fine line. You’d lose all tax benefits on your student loan interest. You’d be praying you could pay it off without losing your job, having an emergency of ANY kind, and putting a massive hit on your credit score. A part of your credit score is based on credit extended to you vs. how much you’ve used. For example, you have $5K in loans and a new $5K credit card with 0% bal. transfer. You appear to have 5K in credit with 0% used. Great! Then you pay off the loan with the card. Now you show to have 5K in credit with 100% used. Loan companies might notice that you used the card to pay off the loan, but your score will still show a heavy user. Card companies will frown a bit because they will label you as a transferrer and not a user. They will gladly accept the 5K transfer, but that is not the reason they gave you the card. In the future, if you beging to transfer balance from card to card, companies will turn you down because they will not see you as a profitable customer. They might not tell it to you in those exact words, but they can do that.
Yes it is possible to get a loan after a debt ciodnlosation loan. You just have to find a lender who is willing. Maybe you know some one in the business who would make you a loan. Lots of ways to get another loan However my advice would be not to take out another loan. You just had the bills consolidated because you owed too much.. Making a new loan will just help get you back in another mess and possibly a bankruptcy which is much worse for your credit. We can not borrow our way out of debt .. wont work im sorry I dont know much about your situation . but most usually more debt doesnt help any one who already owes too much . I wish I had a better answer but I dont The best thing you can do is try to increase your income and pay your debts down I was in banking 40 years . and personally I think the worst thing you could do is go borrow some more money after a recent bill ciodnlosation. I wish you the best of luck RD
NO NO NO NO.. DON’T DO IT!Ok, I’m a financial asvodir.. so here goes.Your credit card company wont tell you this, but if you are late.. even a day over, they can punch your rate up to 30% or whatever they want. Also, say you pay it on time and they simply don’t get it hello 30%. No excuses. You pay.Now you don’t want to get stuck with a 30-100k bill at 30%. Now that this horrrible administration has taken out the personal joe’s ability to declare bankruptcy and that credit cards are changing minimum payment laws so that minimum payments will be much higher.. I advise you to stear clear of this. Hope that when you get done you can get into a program (they are out there) that will allow you to drop your interest rate by 1% after 24 months of ontime payments and another .25% if you make it auto pay Look, some of the lowest rates you’ll see should be on student loan rates. When I went rates were at 8%. That’s not so bad..The only reason I’d say to pay it off is if you can secure it to a lower secured credit line like a home equity loan (if rates dump again). But since student loans are federally guaranteed, you should be able to defer or forbear most if you decide to go back to school later, or get that degree you thought you wouldn’t need. If you switch this principle amount out of a guarenteed student’ loan, that money is no longer eligible for a forbearance or deferance.Good question Hey here’s a thought though if you ever plan on having a home of your own.. get a credit card, but KEEP YOUR PRINCIPLE DOWN BELOW 30%.. in other words, if your limit is 1000 bucks, never use more than $330. Why? Because the credit agencies will see you as being desperate for money and will drop your score if you use more than that. Keep in mind that you want to build up your score now so that when you want a good credit card, or low mortgage rate on a home.Good luck!!Jason
Sure you can, as long as you are disciplined. I trerfsaned mine to 2.9 fom 7.9. The advisor there panicing is correct but if you have the discipline to not be late then you are ok.Dont use that credit card, they always pay the lower debt first letting the higher rate accumalate.Make sure the 0% is not just intro but for the length of the loan. You usually can negotiate on cards with 0 balance if you call them.MAKRE SURE YOU HAVE A 0 BALANCE ON THE CARD AND DONT USE IT< TREAT IT LIKE A SIGNATURE LOAN
NO NO NO NO.. DON’T DO IT!Ok, I’m a financial adosivr.. so here goes.Your credit card company wont tell you this, but if you are late.. even a day over, they can punch your rate up to 30% or whatever they want. Also, say you pay it on time and they simply don’t get it hello 30%. No excuses. You pay.Now you don’t want to get stuck with a 30-100k bill at 30%. Now that this horrrible administration has taken out the personal joe’s ability to declare bankruptcy and that credit cards are changing minimum payment laws so that minimum payments will be much higher.. I advise you to stear clear of this. Hope that when you get done you can get into a program (they are out there) that will allow you to drop your interest rate by 1% after 24 months of ontime payments and another .25% if you make it auto pay Look, some of the lowest rates you’ll see should be on student loan rates. When I went rates were at 8%. That’s not so bad..The only reason I’d say to pay it off is if you can secure it to a lower secured credit line like a home equity loan (if rates dump again). But since student loans are federally guaranteed, you should be able to defer or forbear most if you decide to go back to school later, or get that degree you thought you wouldn’t need. If you switch this principle amount out of a guarenteed student’ loan, that money is no longer eligible for a forbearance or deferance.Good question Hey here’s a thought though if you ever plan on having a home of your own.. get a credit card, but KEEP YOUR PRINCIPLE DOWN BELOW 30%.. in other words, if your limit is 1000 bucks, never use more than $330. Why? Because the credit agencies will see you as being desperate for money and will drop your score if you use more than that. Keep in mind that you want to build up your score now so that when you want a good credit card, or low mortgage rate on a home.Good luck!!Jason
Everyone is correct here, elcspialey the worries of the Advisor. If you’re transferring to a card that already includes a balance, this is a very bad idea. They will hold the transferred balance and require you to pay the balances in order of appearance meaning that all your payments will be applied to the transferred balance ONLY WHEN your higher interest current balances are paid in full. Transferred balances are almost always held until last.You’d be balancing on a fine line. You’d lose all tax benefits on your student loan interest. You’d be praying you could pay it off without losing your job, having an emergency of ANY kind, and putting a massive hit on your credit score. A part of your credit score is based on credit extended to you vs. how much you’ve used. For example, you have $5K in loans and a new $5K credit card with 0% bal. transfer. You appear to have 5K in credit with 0% used. Great! Then you pay off the loan with the card. Now you show to have 5K in credit with 100% used. Loan companies might notice that you used the card to pay off the loan, but your score will still show a heavy user. Card companies will frown a bit because they will label you as a transferrer and not a user. They will gladly accept the 5K transfer, but that is not the reason they gave you the card. In the future, if you beging to transfer balance from card to card, companies will turn you down because they will not see you as a profitable customer. They might not tell it to you in those exact words, but they can do that.