How to Get Debt Consolidation Help
If you need debt consolidation help, you’re not alone. Many people face financial crises at some time in their lives. Whether the crisis is caused by gambling, personal or family illness, or the loss of a job, your financial situation doesn’t have to go from bad to worse.
If you or someone you know is in financial hot water, consider these options: realistic budgeting, credit counselling from a reputable organisation, debt consolidation help, or, as a last resort, personal bankruptcy. How do you know which solution will work best for you? It depends on your level of debt, your level of discipline, and your prospects for the future.
Develop a Budget: Take control of your financial situation. You can give yourself the best debt consolidation help. The first step is a realistic assessment of how much money comes in and how much money you spend. Start by listing your income from all sources. Then, list your “fixed” expenses – those that are the same each month – such as your mortgage payments or your rent and your car payments.. Make sure you can make ends meet on the basics: housing, food, health care, insurance, and education. Next prioritise things like clothing, entertainment, recreation, etc.
Contacting Your Creditors: Contact your creditors immediately if you are having trouble making payments on time. Tell them why it’s difficult for you, and try to work out a modified payment plan that reduces your payments to a more manageable level. Don’t wait until your accounts have been turned over to a debt collector.
Dealing with Debt Collectors: The Fair Debt Collection Practices Act is the federal law that dictates how and when a debt collector may contact you. A debt collector may not call you before 8 a.m., after 9 p.m. Tell debt collectors that you are seeking debt consolidation help and ask them to work with you. They must honour a written request from you to cease further contact.
Credit Counselling: If you aren’t disciplined enough to create a workable budget and stick to it, if you just can’t work out a repayment plan with your creditors, or can’t keep track of mounting bills, you will need debt consolidation help. In that case contact a credit counselling service. Your creditors may be willing to accept reduced payments if you enter a debt repayment plan with a reputable organisation.
A successful plan requires you to make regular, timely payments, and could take 48 months or longer to complete. Ask the credit counselling service for an estimate of the time it will take to complete the plan. Some debt consolidation help services charge little or nothing for managing the plan; others charge a monthly fee that could add up to a significant charge over time.
Debt consolidation help involves a debt repayment plan, but it does not erase your credit history. Under the Fair Credit Reporting Act, accurate information about your accounts can stay on your credit report for up to seven years. In addition, your creditors will continue to report information about accounts that are handled through a debt repayment plan. A demonstrated pattern of timely payments will help you obtain credit in the future.
Auto and Home Loans: Debt repayment plans usually cover unsecured debt. Your auto and home loan, which are considered secured debt, may not be included. You must continue to make payments to these creditors directly.
If you fall behind on your mortgage, contact your lender immediately to avoid foreclosure. Explain how you are receiving debt consolidation help in an effort to get out of debt. Most lenders are willing to work with you if they believe you’re acting in good faith and the situation is temporary. Some lenders may reduce or suspend your payments for a short time. When you resume regular payments, though, you may have to pay an additional amount toward the past due total. Other lenders may agree to change the terms of the mortgage by extending the repayment period to reduce the monthly debt. Ask whether additional fees would be assessed for these changes, and calculate how much they total in the long term.
Debt Consolidation Help: In your efforts to get out of debt, you may be able to lower your cost of credit by consolidating your debt through a second mortgage or a home equity line of credit. Think carefully before taking this on. These loans require your home as collateral. If you can’t make the payments-or if the payments are late-you could lose your home.
Bankruptcy: Personal bankruptcy generally is considered the debt consolidation help of last resort because the results are long-lasting and far-reaching. A bankruptcy stays on your credit report for 10 years, making it difficult to acquire credit, buy a home, get life insurance, or sometimes get a job. However, it is a legal procedure that offers a fresh start for people who can’t satisfy their debts. Individuals who follow the bankruptcy rules receive a discharge – a court order that says they do not have to repay certain debts.
Damage Control: Turning to a business that offers to help you get out of debt may seem like a reasonable solution when your bills become unmanageable. Be cautious. Before you do business with any company advertising debt consolidation help, check it out with your local consumer protection agency.
Companies often appeal to consumers with poor credit histories, promising to clean up credit reports for a fee. They can’t do anything for you that you can’t do for yourself. Only time and a conscientious effort to get out of debt by repaying your loans will improve your credit report.
- If you’re thinking about getting help to stabilise your financial situation, be cautious.
- Find out what services the business provides and what it costs.
- Don’t rely on oral promises. Get everything in writing.
Please refer to the Money Advice Service for more information on debt consolidation loans. Stepchange also offers a debt consolidation calculator which, unlike other companies, does not try to persuade you to take out a loan but rather helps you understand what option is best for you.