Category Archives: Debt Consolidation

Answer To Whether Using Credit Card Is Better Than Debt Relief To Pay Off A Debt

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Most people use their credit card to pay of a debt whether it is a medical debt or any other without realizing the consequences of it. Credit cards nowadays are issued and are available in plenty. You will find a single credit card issuing company offering a number of different types of credit cards that have different credit limits, names and most importantly different rates of interest.

It is this rate of interest that experts suggest you consider when you use this plastic whenever, wherever and however you feel like. Inconsiderate and extensive use of credit may reach to its limits making your financial health and situation worse. Therefore, take out some time to research and go through the pros and cons of it before you hand it over the counter for swiping in the Electronic Data Capturing device or EDC.

Debt Management Plan

Credit cards and debt payments

It is best to use your credit to pay only short term expenses. This means that you must use it only for those expenses that you know and feel that you can repay at the end of the monthly billing cycle. This billing cycle may be different for each card which is the primary thing that you must consider to avoid accumulating debt in the form of interests and charges.

If you find that your budget does not permit you to save enough money to repay your credit card bill then you will almost certainly face a bigger and new problem. The outstanding amount on your credit card will increase thick and fast as interest charged on credit card is not only high but also compounded extensively. This will grow your debt.

It will not help much even if you diligently pay the minimum amount due on your credit card diligently as the interest on the unpaid debt will add quickly to your debt. It is therefore required that you know about the terms and condition of your credit card, the APR and use the card that has the least interest if you really have to.

If you find that you do not have enough credit to cover your bill you will have to consider other options such as debt consolidation, debt relief, and even debt settlement. Keep in mind that filing Chapter 7 or Chapter 13 bankruptcy is also an option to get rid of your debt but that should be your last straw when circumstances really turn out to be unbearable and unavoidable.

Ideally paying off a debt with your credit card may stop the calls from the creditor or collection agency for a specific debt but that does not mean you have eliminated it completely. Ideally, it is just a way to delay such calls as these will again surface if you miss your credit card payment which is highly on the cards and have all possibilities.

Therefore, you must follow the advice of the financial experts who suggest not using credit cards to pay any debt as it is nothing but transferring a lower debt into a high-interest debt in most of the times. 

Consider different approach

Instead of using a credit card to pay off a specific debt you must explore other available options for it. These options are as good and will not impact your credit score to the extent of missing a credit card payment.

Consult with your creditors directly or through a debt adviser, debt attorney or any credit counseling agency. This will help you to find out whether the creditor will allow and agree to an interest-free payment plan. This will make your debt more manageable than accruing interest on your credit card due to non-payment.

 You can also try out different debt relief programs that are offered by several non-profit organizations and government to help you get rid of your spiraling debts. Visit different websites to find out more about these programs and whether or not you qualify for it.

The most viable options seem to be a debt consolidation loan or a debt settlement program. You can consult a debt settlement company in this regard and even click here to know more about debt settlement companies if you do not know about any of it already. If you consolidate your debts you will have only one single debt to repay every month which typically has a very low monthly payment.

On the other hand, if you take up a debt settlement program you will pay far less than the actual amount you owe to your creditor but for that, you will have to make a lump sum payment one time.

Whatever processes you choose make sure that you have all your right protected and also know that the process will not cause any further problem in your debt free journey. There are lots of regulations set by the Fair Debt Collection Practices Act or FDCPA that you must know so that creditor or debt collection agency can follow any unfair practice.

Your credit score

It is your credit score that matters in the end. Any debt going to collections will harm your credit score by as much as 100 points. Moreover, if you cannot repay any debt then this fact and report will take seven years to disappear from your credit history.

Therefore, the best way is to choose a federal debt relief as the federal stimulus money will give you more flexibility when you will negotiate for a debt settlement with your creditors. The creditors usually use the stimulus money as a cushion and help you to eliminate a significant percentage of your debt. You may pay it back in one lump sum or even take up a payment plan.

This will not have all of the negative consequences of bankruptcy but will slightly lower your credit score which is nominal when you consider the fact that your debt can be reduced by as much as half. Moreover, you can easily rebuild your score within a very short time by paying off your debt.

Overcome Your Fear of Debt and Become Debt Free

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Debt can be a very scary, depressing and demoralising subject for many. Acquiring debt is so easy today with credit cards and easy loan schemes. Paying them off is often the hardest part. Mounting debts can create fear in the hearts of the debtors and affect their life in more ways than one. It is essential that you address the fear of debt and overcome it.

Fear of debt is very dangerous as it can rob you off your sanity and peace. This article will discuss the problem of debts and how you can overcome it.

How did you get there?

Debt Consolidation

A small amount of debt can grow into a large sum, and you will still be thinking how you got there. People who are already in debt have the tendency to pile on it by borrowing more money. Inefficient management of money and not taking control of your finances are some of the reasons you fall into debt.

Student loans and credit card loans are one of the most common types of debts you get to see. Paying them becomes even more difficult if they don’t have the job or don’t make enough money. But, when debt is due you have to pay it whether you have the money or not. As the sum grows, anxiety and fear can engulf you. Soon, you will be avoiding phone calls fearing it is one of your creditors. You would ignore the bills until they become cause for a huge stress.

How it Affect you?

Debt can be the reason for stress, anxiety and depression. It can take a toll on your health, life and the fear of debt can keep you on the edge most of the time. So, it’s important to address the issue and take steps before the fear of mounting debt becomes too dangerous.

How to Overcome the Fear of Debt

If you suffer from the fear of debt, it’s now time to take steps to overcome the problems. Fortunately, there are effective strategies and tips that can help you through the process.

Here are some of the things you can do:

Create a Plan

The first step to overcoming the fear of debt is creating a plan. A plan or strategy is essential to carve out steps you can take to bring your finances under control. The journey of paying off all your debt can be long and tedious. So, you need a road-map to make the process easy and keep you focused on your goal.

First, you need to open up your bills, gather your account information and calculate how much of debt you are in. Secondly, stop avoiding the calls and start taking responsibilities. Talk to your creditors, and find out a way to pay off your debts that is most suited to your current financial situations. It will also include steps you need to take to keep the expenses under control.

Gather up the courage to face the debts and think of a plan that can help you. You can also take the help of a professional financial expert. Whatever you do, make sure you have a plan of attack to overcome the fear of debt.

Approaching the Creditors

Now, this step can be embarrassing, but it is important that you make contact with your creditors. It’s natural to feel embarrassed. Unless you contact them you cannot negotiate your debt payment agreement.

The fear of what the other person on the phone will say to you can be a big hurdle in solving your problem. Remember that there are many people like you who are facing such problems. Be polite in your conversation. Being apologetic can help in making the creditors feel that you are serious about paying off the debts.

You also need to be firm when agreeing to a term. Their initial offer may not be ideal for you. Saying no is important so that you can make them to agree to a term that will be acceptable to you without making you broke.  

Making the Effort

The only way to conquer the fear of debt is to face them head-on. Ignoring your debts and bills won’t make them go. You need to create a plan to overcome it. Explain your situation to the creditors. You will be surprised how reasonable the creditors can be.

Once you have agreed upon the plan, it’s now time to implement your strategies. Getting started on your plan will boost your confidence and help you overcome your fear of the debt. The first thing you need to do is control your expenses. Cut down on expenses that you don’t necessarily need. Food, bill, rent, and other important things come first. Eating out, luxury items shouldn’t be in your priority list as of now.

And, if you fail to make the monthly or weekly payment of amount you have agreed-on, don’t panic. Again, explain the situation to the creditors and try not to fall back on old pattern of avoiding the debts.

The Bottom-line

In order to overcome the fear of debt, you will need to be realistic about it. Avoiding the problem will not help you, facing them will. So, make sure that you call your creditors and let them know you are willing to make an effort.

Is It Better to Repay Debts or to Save First?

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Once you finish college, get a stable job, find a place to live and start earning enough money a question inevitably comes up: “Should I start paying off my debts with the money that is left over every month or should I start saving up and then pay my debt once I have a substantial amount on my account?”. The short answer is that you should try and pay off as much of your debt before you start saving money. The long answer will include the “why” as well as the “what” you should do.

Debt Management Plan

Increasing debts

You see, it is all in the percentages that keep building up the amount of money you either have on your account or you owe. For instance, the money you have in the bank will have a very low interest rate, around 1%, while the interest rates on your debt can be anywhere between 5% and 21%, maybe even higher. So in the best case scenario, your debt is going to get bigger for about 4-5% every month, so when you get enough to finally pay off the original debt, the amount that you actually have to pay then will be much greater.

Profit for the bank

Another thing about banks is that yes, they are quite much into business and therefore aim for as huge profits as possible. And the major portion of profits for banks comes from your savings. The amount of money that you save with your bank is used to lend cash to other people or borrowers. The difference at which the bank borrows money from you and the borrowing rate it charges on other customers is their actual profit margin. In simpler words, it will always cost more to borrow money from the bank that what you would save.

Pay off your most expensive debts

Be sure you keep your credit cards after you have  paid them off in full, you will have a relatively good credit rating if you occasionally buy something with them and then pay it off quickly afterward. You can also get an interest free deal on a card and pay it off before the interest free period runs out. This will help you in case something unexpected comes up and you have used up all your savings.

Use your savings

If you have some money in your account right now, you should consider using as much of it as you can part with to pay off those debts with the highest interest rate first of all.  Therefore, you should take a look at your current debts, and mark the ones that cost you the most every year and focus on repaying them with the money you have saved – just leave enough money for your basic needs so you won’t have to take out another loan down the road.

There is something you should be aware of when trying to pay off your debt using your savings – not all debts can be cleared away efficiently using this method. For instance, certain types of mortgages will have actual penalties for paying before the set date. The best solution, in this case, is to take a part of your savings and put it into a different account that is specifically designated for the purpose of paying off the mortgage. The interest will keep building up and when the right time comes you can then use it to pay the debt. Be sure you are well informed about all the circumstances regarding your debt and read everything carefully before you sign.

Exceptions to the ‘paying-off-your-debts’ rule:

There are but very few occasions that can serve as an exception to this rule of paying off debts using your savings.  For example-

  • You can rule out the need to pay off your debts when the debts are cheaper than your savings. this basically means that if you feel that the cost of paying those debts are much higher than what you currently have in your savings account, then there is no point.
  • Penalty exception: if you already have debts that are incurring a stipulated amount of penalty on you, such as mortgages and other exclusive loans, you can consider not paying them until the penalty amounts have reduced. You can leave the cash in your savings account until the penalty is small enough.
  • Interest-free debt exception: This is specifically for those individuals who have constantly managed to pay off their debts so that they eventually become interest-free through prepayments. In such cases, if the interest rate on your debt is lower than the amount your saved cash earns after all tax deductions, you can easily earn from your savings and keep the debts as well.

Conclusion

The best is to make concerted efforts into paying your debts as quickly as possible. The sooner you pay off your debts, the happier and effortlessly you will be while managing your personal finances in the future. The advantages of paying off your debt first should be pretty obvious now – you will want to avoid letting the interest rate blow up and paying as much as you can right now.

Save money and get out of debt – Think out of the box with 6 tips

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It’s rather common to wish to get wealthier with every passing day. However, one of the major differences between all those who’re actually wealthy and those who’re not is pretty basic. It’s more like the wealthy are the people who essentially earn interest, whereas the rest are busy paying interest or perhaps even seeking debt relief. This is obvious as the more interest you keep accumulating against you, the higher are your chances of going down the debt whirlpool.

Save money

So, you must be wondering that wherein lies the key to financial bliss. Firstly, it’s rather important for you to realize that money is the most effective tool that can ideally help you reach your goals. True financial independence calls for you to make money begin working for you. Moreover, as soon as that happens, you’ll not only be able to get out of debt, but also build yourself a solid financial foundation for your future.

Tips to save money which you thought wouldn’t work

Basically, the trick doesn’t lie in saving money itself. It’s more about making those things work which you initially thought wouldn’t. Now, if you’re looking for ways to get out of debt, then it’s high time to take immediate action. Read on to find out how you can do so.

Be easy and focused: The very first thing that most don’t think can work is to be as easy and relaxed as possible regarding saving money. What’s actually important is the focus bit. Getting tensed and panicking unnecessarily won’t get you anywhere and neither will your finances benefit from it. You need to go about everything easily because the more you force yourself at something, the tougher it’ll get.

Simple steps make the difference: Believe it or not, but it’s the small and simple steps that can make a major difference to your financial situation. Hence, don’t ignore that 1 dollar. Put it aside for you never know what they can finally amount to be.

Set yourself time limits: Simply deciding that you’ll do something or take a certain step doesn’t really go a long way. You’ve got to put a time cap on all your decisions. Most don’t realize the worth of time especially as far as finances are concerned. For instance, you decide to clear your debt on a particular credit card. In that case, simply deciding doesn’t really go a long way because with increasing time that so-called payable credit card debt is going to take on unmanageable proportions. Set yourself a time limit and work towards paying off that particular debt by then.

Try and be organized: No matter how busy you’re, good finances always call for organization. If you don’t know what all your outstanding debts are in the first case, then there’s no point in looking for debt relief. Get all your papers in order and know how much you owe and to whom. Most importantly, you should also know things like what exactly is needed for your everyday life. Unless you’re accurate about these things, it’s more than expected that you’ll land up spending more than required.

Try being innovative with your house: There are so many things all around you that you might be overlooking. Get yourself working and have a close look all around and see where exactly you can save money. For instance, when it comes to your house, then you could try some measures like say weather stripping. It’s rather easy to install and it can make a great difference in helping to keep out drafts. You could also insulate outlets and light switches also. People often forget that these are sources of air leaks. Steps like these will prove friendly to your pocket.

Make money with unused stuff: It might seem weird, but it’s surely worth giving a thought. You must’ve ignored or in fact not even spared a thought to what that clutter you’ve got could do for your finances. There are loads of opportunities online which you could make use of by selling those old books instead of letting them turn yellow, you could sell off electronics stuff instead of letting them rust. Or easier still, you can sell them all off at your nearest thrift store.

Keep in mind the tips discussed above and make use of the money that you make towards getting debt relief for yourself. Be alert and innovative and your finances are bound to get better with every passing day undoubtedly.

What Are Pros And Cons Of Debt Consolidation?

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Debt consolidation is one of the loan payment methods where you can take out loans to pay off other loans. Multiple debts are combined together, such as student loans, credit card debt and other kinds of debts as well. It is an effective way to pay off the debt, but it does have drawbacks as well.

Debt consolidation

It is true that someone who has many debts to pay is always distressed and even buried in depression if he is going through a financial crisis. Car loans, home loans, education loans, credit card loans and so on are basic necessities of a middle-class man in this world running at the pace of light. But when all these climbs on your head like termite after consuming your pockets, it becomes very hard to cope with the hassle circumstances.

Debt consolidation, in that situation, comes up as a sigh of relief. But when anything is related to our money and financial management, it is very important to count on each advantage and disadvantage of it.

 Debt consolidation has its own pros and cons which you should explore before going for it.

Pros of Debt Consolidation

  • Debt consolidation means to club all your debts and loans into one, which reduces interest rates that are a great thing to trim extra payoffs. All you have to fret about is a one-time payment.
  • One very important and aiding advantage of debt consolidation is that you stop getting calls and notices from banks and collection agents. When there is no one to trouble you by calling every day asking for money, your psychological health becomes positive and this makes you constructive in your thoughts and production at your work.
  • Debt Consolidation Company purchases your worries from the collection agents and pays off credit reporting companies.
  • If you opt for consolidate debt, it saves you from being declared bankrupt. How good this deal is, only a big debt holder knows. By devising a financial budget and with the help of consolidate debt, you can start to improve your reports and credit stores. The best thing is you can start your financial management afresh where you can avoid all the wrong decisions you’ve made in past. There will be no one to give you frowns while you do this.

Cons of Debt Consolidation

  • Once the funds are available, People often fail to manage their finance again causing themselves to commit the same mistakes that they’ve done in past. It brings in more problems and accumulates more debts and financial obligations.
  • Consolidation loans give you long timelines like 10 to 30 years to settle your one-time debt which however saves you from debts to pay on short tenures that too at high-interest rates.
  • For all this time, your assets or your property remains mortgaged tied to a home equity loan usually. This means your debt consolidation loan is given against the value of your assets which are kept mortgaged. If you fail to pay the consolidated debt, you end up losing your home and assets.
  • If you analyze deeply, you’ll get to know that in the end you will land paying more over several years than it had to be on short tenures. To burden you in the end, you’ll incur penalties like late fees or so.

Better Financial Management

Debt consolidation is one of the effective debt payment ways, but it comes with some risks. For people with no other option to pay off debt should opt for debt consolidation as the last option. While it can help you pay off the debt, it increases your financial burden.

To avoid falling into the same pattern again, you need to build a better and more effective financial management system. Here are some effective ways:

  • Avoid adding to the debt and don’t buy anything that will add to your existing debt. Reducing your expense is another way of reducing the burden of debt.
  • Create a budget and stick to it. It is one of the most effective ways to save money and manage your finances more effectively. A budget can help you live within your means.
  • Save more money by earning extra money and reduce your expenses. Start a fund so that you can keep the extra money on it. This way you will have more money to pay off the debt.
  • Be consistent with monthly payments. You are already in a debt, so you don’t want to extend the burden by being late on your monthly payments.

The Bottom-Line

So, before going to opt for a consolidate debt, you must be self-aware and calculative in your approach. Once you take a consolidate debt, you should manage your financial structure well in order to refrain these hassles circumstances again.

What do you think about debt consolidation?

What to Expect from Debt Consolidation

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Debt has fallen on you like an avalanche. You don’t know where to start digging, and all you can think about is how much more debt you  have  in your way. You never thought you’d be in this mess, but here you are – buried. The good news is that there is a way out of the pile of bills with debt consolidation.

Debt Consolidation

Debt consolidation has become a popular option for those looking to eliminate their debt problems as quickly and effortlessly as possible. With the number of companies sitting there to overlook your debts and offer counseling on paying them off, debt consolidation can be a tad tricky to understand at times. So while you’re looking at the stack of bills piling on your desk, are you wondering about how debt consolidation actually works?

Knowing what to expect when you choose debt consolidation will help you finally put an end to your financial madness.

Making an Appointment

The first thing you should do is research the different debt consolidation companies available. One of the easiest ways to check the credibility of a company is by keeping your eyes out for their BBB or Better Business Bureau reviews. If the company has secured an A+ rating on BBB, then you can trust the company with your eyes closed.

Just like any other business, each debt consolidation company has its own fees for the work they will do to help you. While you may not want to go with the most inexpensive company,  getting a good rate is important in starting your road to financial freedom.

  • Start with finding a company of a good and strong reputation. Seek recommendations, read reviews, and research. For example, the National Foundation for Credit Counseling (NFCC) offers certification for counselors and sets certain requirement for member organization. Thus, seeking references from the NFCC will be a good way to start.

Once you find a suitable company, call them to  schedule an appointment. Be sure to ask  about the type of documents you’ll need to bring.

The First Appointment

Duringthe first appointment, your debt consolidation counselor will look at your income, expenses, and debt. He or she will then calculate all of your debts, and then determine the affordability of the amount that you will have to pay per month.t.

To determine that exact figure, your counselor can look into finding a debt consolidation loan, and start calling creditors to discuss settlements.

Before Your Second Appointment

Between your first and second appointment, your counselor will be hard at work calling your creditors to negotiate a settlement. Many lenders will decrease the amount of money you owe them if you close your account and agree to pay the lower amount. This is where having a good counselor will benefit you. One that is experienced in negotiations and well known in the circuit of creditors will have a better chance  of getting your debt decreased significantly. Some people can see a decrease in debt up to 20%.

While you are at the stage where you are about to schedule a second appointment, to help you live a life that is completely debt-free, a certified credit counselor will calculate your total debts. All secured and unsecured loans are taken into account, which can help create an all-inclusive budget for you.

Once the final amount is settled or all debts, your counselor will go to work on finding you a loan that has the lowest interest rate. With a low-interest rate,  there are higher chances of you being able to afford the monthly payment.

Your Second Appointment and Beyond

At your second appointment, you’ll find out how much debt you’re responsible for, and the loan that your counselor has found for you. If you agree, you’ll fill out the necessary paperwork.

The next step is to determine how you will make the monthly payments on your debt consolidation loan. Your counselor will help you come up with a budget. You’ll use this budget to the best of your ability, and schedule subsequent appointments w to make necessary adjustments, if any. .

Paying fees

Certified professionals will charge you a certain amount of fee. You don’t want to settle with something that’s too inexpensive for you to digest, or go for a company that plans on burning a hole in your pocket. Make a comparison especially when it comes to getting a bang for your buck. You will find non-profit organizations as well, but you will still be expected to pay a minimal fee and some nominal charges to get your consolidation work started.

Final words

Once you manage to grab a hold  on your budget and payments, you will be free to deal with your personal fianances on your own. If you ever need assistance, your debt consolidation counselor is only a phone call away.

How To Choose Best Debt Consolidation Company In USA

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I do think that there is no need to drive the nail home why you should try your best to get out of a debt trap. There is a line of reasons which are really very good to go through and push you into some prompt actions. Debt consolidation companies are working in the USA.

Debt Consolidation

Debt consolidation means taking out a loan to pay off many debts at lower interest rates. The multiple debts can be paid when they are combined into one as single big debt with smaller monthly payments. Personal loans and credit card debts are some of the types of debts that can be consolidated into one. One of the best things about this type of debt payment system is that you don’t have to pay multiple lenders, just one.

A debt consolidation company in the USA can help you get through the process by guiding you. But, when it comes to finances, you need to take decisions wisely. It is essential to understand how debt consolidation works. Choosing the right consolidation company is essential for an effective debt payment.

Here is a list of tips finding the best among them:

  • Consider industry rating of the concerned company:

A good industry rating for a debt consolidation company in the USA is sort of identification mark that says it is a source to rely on. A reputed US credit consolidation company is expected to have a positive rating with the Better Business Bureau or BBB and industry organizations too. A good rank is a sort of piece of pride and so the companies never slip the chance of mentioning the affiliation on their websites.

However, there is no harm in doing some additional research and go for verification of good rating as claimed by the lenders. This is ‘rule of thumb’ as to how to choose the best debt consolidation company in the USA. If the company demands an upfront charge and several complaints have been pasted against the company, it will be wise of you to move on to other lenders.

  • Lender’s statement:

The debt consolidation company often arranges for automated payment. It is both hassle-free and worry-free process of debt repayment. But that does not mean you will not ask for banking statement or do the same once in a blue moon. You must get a regular banking statement to know how the deducted money is working as well as the progress report of your balance after money transfer to your creditors’ account.

Depending on the lender, there are certain fees while closing the loan and other services. Sometimes, the lender will suggest adding the cost to the balance of the loan. Often the borrowers don’t have the immediate money to pay for the fees and adding it to the balance seem more practical. For all these purposes, you need to have lender’s statement so that you can keep up with the repayments.

  • Is it an inexpensive choice?

The well-known companies are very transparent in their service through the cost may be sometimes their downside. These companies always provide in-detail information including the fees for their services. No hidden fees and no effort to hoodwink the customers. They have goodwill in the market and they swear by ethical business practices. You need to check if the USA debt consolidation company is actually legitimate. Does it ask you to pay in advance?

If it is the case, then the company is operating in defiance of strict USA laws that prohibit the practice of demanding any sort of advance payment. One of the best tips regarding how to choose the best consolidation company in the USA is to get everything in writing.

  • Check with the Better Business Bureau

One of the best ways to find the best consolidation company in the USA is to check with the Better Business Bureau. People who are researching about the debt Consolidation Company can rely on the BBB ratings on their website. There you will find companies with accreditation. The website list more than 4, 00,000 companies in the USA and uses a robust rating system. You can also check if there is any complaint against the company and how it was resolved. The same goes for any legal action against the company.

It is essential that the company is authentic and reliable as you are already in huge debt. Hiring the wrong company will only add to the problems. When looking for a good company for debt consolidation, a little effort, and research can help you.

  • What are agency affiliations?

When it comes to a debt company in the USA, knowing their affiliations is essential. For any reputable debt consolidation company, their association with agencies like Financial Counselling Association of America or the National Foundation of Credit Counselling is a positive thing. For one reason, it shows that the company is good enough and reliable.

Validating company’s authenticity and efficiency are essential. Affiliations are another way of finding out the company’s ethics and the way they handle their reputation. Sometimes, some companies may try to lure customers with religious affiliation. This is one of the best ways to win their trust and religion is such a big deal for so many people. Shared religious belief or not, never trust companies that claim religious beliefs. It has gone nothing to do with any religions. It is simply the company is trying to fool people by appealing to their religious belief.

  • Check for non-profit status

Some debt consolidation company may claim to have non-profit status. Claiming isn’t enough. If they are really a non-profit agency they will be able to produce a certificate to prove it. If the company shows any sign of hesitation or unwillingness, you have a reason to suspect their intentions. Non-profits debt consolidation companies are one of the best options. But, it is essential that you check their credentials before trusting them with your debt management.

  • Confirm that they are licensed

Many states in the USA require debt consolidation companies to have a proper license for practice. This is another one in the checklist for ascertaining that the company is legal and genuine. Go online and check whether it’s required in the state you live in. A quick check will confirm if the company has a proper license. Contact the regulating body that is in charge of the licensing of the companies and confirms it. If you are unable to confirm, then move on to the next company.

  • Loan terms

When looking for a competent debt consolidation company in the USA, it is essential that you pay attention to the loan terms. Longer loans may not be healthy for you. Low payment over a long period of time may sound convenient at first, but you are likely to end up paying more. Your goal should be to pay off debt as quickly and economically as possible. Again, don’t be over enthusiastic about paying debts quickly. There aren’t any shortcuts to pay off debts to give your financial situation.

Things to Avoid When Hiring Debt Consolidation Company in the USA

While there are general guidelines to hire the right debt consolidation company, there are pitfalls that you should avoid as well. When looking for the right company, it is essential that you ask the right questions. If you see any warning signs then back off.

Here are some of the things you need to avoid when hiring a consolidating company for your debt management:

  • Beware of the Ads

Advertisements can be misleading. One of the pitfalls you need to avoid is the bait. Companies in their bid to attract the customers will advertise as offering debt consolidation product only to switch to another product. They basically do this to make a contact. Once they have made the contact, they try selling other products. One of the easiest ways to avoid this confusion is to ask important questions. Remember that debt consolidation is a straightforward process. It involves combining multiple debts into a single loan with a single payment. If the lenders are offering something else, you need to avoid companies and agencies like this.

  • Don’t Rush into Decision

You are already in debt; you don’t need to hurry into it as there are no quick answers to debt payments. Don’t rush into signing anything yet. Take your time and take to several other companies and compare everything essential. Any company that is rushing you should be avoided. A well-reputed debt consolidation company will not do that. Asking the important questions is essential for making the right decision. Make sure you have a checklist to compare the company and see if they are right for your debt management or not.

  • There are no Quick Solution

Did a debt consolidation agency promise quick results? They are probably a fraud. There are no quick solutions to your debt repayment unless you suddenly come in possession of a huge sum of money. Any company that is trying to sell you the idea of a quick solution should be avoided. You need to be realistic about your debt payment. The repayment even the single repayment will depend on your earnings and savings. You should be focussed on how to save more money and control of expenses.

How to Consolidate your Debt

Understanding how the debt consolidation works is essential for resolving the debt problem. As you debt consolidation requires taking out a loan to pay off your other loans. With lower interest rates you will be better positioned to pay off your debts. It involves a process and following it to the letter is essential.

The process of consolidating your debt the right ways is essential. Hiring the right debt consolidation company is essential for getting the right guidance. It requires many steps:

  • Credit counselling session

The first thing you need to do is complete your credit counselling session even before you start with your debt management plan. In the counselling session, your counsellor will first evaluate your situation to determine whether you are in position for debt management or not. You will need to gather all your financial information, such as utility bills, credit cards, and delinquent accounts and others. Your counsellor will tell you what should be your first step. Choosing the right debt consolidation company in the USA becomes even more important now, for the right guidance.

  • Keeping Track of your Expenses

Immediately after starting your plan, you need to track your expenses. Unchecked expenses are the first source for your financial distress. Knowing where your money is going will give you ideas on how to cut back on your expenses. You can use one of the various apps to digitally keep track of your expenses or simple go the old-school style with pen and paper. The bottom-line is to be aware of your expenses. Controlling expenses is essential to take control of your finances. When you are on the process of debt consolidation and management, this will be your vital step that will determine the outcome you wish to see.

  • Creating a Budget

When you are managing debt, creating a budget is one of the most efficient ways of doing it. Create and stick to your budget for a month and then review it to see how well you have done. The debt repayment will depend greatly on the amount of money you save. The more you save the better. You will be surprised how well you have managed by staying within your budget. It is a good practice.

  • Creating a debt Management Plan

Your counsellor will help you create a debt management plan so that you can repay your debts more effectively. They will help you create a budget and agree upon the payment arrangements with your debtors. A good and effective debt management plan is very essential for the success of your debt consolidation process.

The Bottom-line

Whether it is repayment terms or interest rate or your eligibility or other requirements, make sure to get everything enlisted in a paper so that there is no scope of denial on part of the lenders.