Is Debt Consolidation For Me?
by: Jeff Dragt
People with large debts always assume they just can’t afford to get out from
under their debts, so they let them pile up dollar-by-dollar, year-by-year. No
one has to live with large debts, there is always a way out. Debt consolidation
is for anyone who has debts and cannot currently afford to make their monthly
payments. It’s so easy for multiple monthly payments to add up to the point
where you just can’t do it anymore. So, you put it off for one month, and one
month becomes three, three months become six, and before you know it you can’t
possibly catch up. Debt consolidation can get you out of the debt trap that
you’re in. Anyone who has debts that they cannot pay should at least consider
debt consolidation before taking more drastic and permanent steps.
Only in very extreme cases is bankruptcy a good idea, most people can handle
their debt through consolidation. Bankruptcy will leave a scar on your credit
history for a long time, much longer than the seven years that people say it
will. Unless a professional advises you that there really is no other way out of
your debt, bankruptcy isn’t the answer! Debt consolidation is the perfect
alternative to bankruptcy because with consolidation you can pay off your debts,
and while it isn’t instant, it will improve your credit in the long run.
Debt consolidation works by gathering all of your debt, and working with the
people you owe money to, to reduce interest and even take a small portion of the
principal amount due off the bill. Doing this with each bill will lower your
personal debt up to twenty percent, and when you are talking about large amounts
of debt twenty percent can be a lot! Twenty percent can mean the difference
between doable and bankruptcy. Twenty percent can mean keeping your home or
having it foreclosed upon!
The first step after gathering all your debts and reducing them as much as
possible is to do an income to debt comparison. This ratio will determine if
debt consolidation really will work for you. For instance, if you make fifty
thousand dollars a year and only have ten thousand dollars worth of debt, you’ll
definitely be able to work out arrangements because your debt doesn’t greatly
outweigh what you can bring in over a couple years time. But, if your income is
only twenty five thousand dollars a year and you have a two million dollar debt,
it may be difficult to ever get on top of that. Your debt needs to be something
that you can realistically expect to pay off within a few years time. A debt
consolidation professional can take a look at your specific debt to income ratio
and let you know if you are a good candidate, of if you really need to consider
bankruptcy as a last resort. Not paying on the debts isn’t an option, because
bad credit robs you of your buying power, and you need that!
Even if you think that your debt is outrageously high, you should still
consult with a debt coordinator. Even if your debts are high now, you should see
what a debt consolidation company could do for you as far as reducing interest
and debts. Don’t be discouraged until a qualified professional (or two!) can
tell you that consolidation really isn’t an option for you. Don’t give up until
you’ve tried everything, you can’t just roll over and taint your credit without
being one hundred percent sure it’s your only option.
The majority of people do qualify for debt consolidation, which is great!
Even though no one wants to pay a bill, many consolidators are able to get all
of your debt into one monthly payment. One monthly payment takes the stress out
of paying the bill, and also makes it fast and convenient. Your consolidator
will work with you and your debt to determine what you can afford and what will
make your debt collectors happy. Often, debt needs to be consolidated in two or
three parts, to fit within your monthly payment. It would be ideal to do it all
at once, but celebrate the fact that you are able to pay on your debts at all!
Debt consolidation isn’t easy, but it is the answer for all those bills and
collection agencies that are calling you. Once the process is started, debt
consolidation is easy, and relatively stress free. Be sure to be honest about
what you can afford monthly, so as not to lapse on your consolidation payments.
The last thing you want to do is take steps backward after you’ve come so far.
Each time you make a payment on your debt you’ll feel the weight lifting, and
you’ll be able to sleep better at night knowing you are making a dent in the
debt you have.
No one tries to go into debt, but it’s easy to fall into a debt trap. Medical
issues, financial strain, or job issues are common reasons for debt. Getting
into debt isn’t fun, and getting out isn’t much fun either, but once you are
there it’s worth the effort. And, living debt free is a lot more fun because
you’ve regained your buying power. You’ll have a lot more respect for yourself
and your ability to follow through, and other companies will be willing to give
you a second chance when they realize you have righted your wrongs.
So, who is debt consolidation for? Everyone! Everyone should at least
consider consolidating his or her debt. There is no easy way out of monthly
payments that cannot be met, but this is the best way to get control back of
your life and your finances. Even if you have huge debts, contact a debt
consolidation company in your area for a free consultation! You’ll be so glad
you did, because you’ll gain confidence, respect, and get some much needed
guidance to succeed in the future!
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