Just as there are different debt relief options that you can choose from, there are also a large number of debt relief companies that provide such services. It is therefore necessary that you only choose a reliable and legitimate company out of this large pool. There are several debt relief companies that are absolutely legitimate though there are a few scam companies as well. This is why you are advised to research well before you choose one.
As it is, you have fallen behind your schedule and have made the situation worse falling out of your pledge and struggling with your debt. You surely will not want to make it worst by selecting a scam company that will take and run away with your money leaving stranded in the middle of nowhere. The increased stress and fees and interests will make you physically as well as mentally sick.
Therefore, there is no other alternative than to choose the best debt relief company and the best Pennsylvania debt relief option. This will help you to:
- Come out of the debt hole
- Regain control of your finance
- Manage your debt easily
- Maintain your physical and mental health as well as
- Control your life and relationships.
Yes, financial problems and debt issues can cause different other issues such as psychological troubles, health problems and even strained relationships.
About debt consolidation
When you face debt issues and fall behind your schedule you tend to think what could have probably gone wrong with your promise to do whatever it takes to manage your debt and get rid of it. Well, there seems to be one and only one problem: you do not know how to do it.
- The first step is to make a list of your debts and prioritize these to know which are the high interest ones that you want to consolidate
- The next step is to decide which the best option for you is.
Ideally, the most effective and feasible way to get rid of any type of debt irrespective of the type of debt is debt consolidation.
Debt consolidation simply put is the process where you combine all or almost all of your existing debts together and roll all of them into one single loan. This loan has significant characteristic features and abilities such as:
- It can make your monthly payments easier
- It will carry low rate of interest as compared with the average rate of interest of all your loans
- The term of repayment will be longer thereby provide you with a fair bit of breathing space and most importantly
- It will not affect your credit score in any ways.
However, you will need to make sure that you follow the four proven ways to consolidate your debts to make it work perfectly for you.
Get the right loan
Right at the outset it is important that you have chosen the one that best fits your financial and debt situation. It starts with choosing the right type of loan to get your debt under control.
- The loan should be a low interest debt consolidation loan so that you do not end up paying more on interest. Remember, even a low rate of interest can prove to be costly in the end if the loan term is longer. Therefore, balance the rate of interest and the loan term with your needs and affordability to repay it without any defaults.
- It is also important that you choose an unsecured debt that will not have any collateral attached which you may lose due to non-payment.
In addition to that, you must also make sure that you choose the right type of debts that you want to consolidate with the new loan. You should ideally choose unsecured debts like credit cards, medical debts, personal lines of credit, and department store credit cards, because unsecured debts always carry a high rate of interest with them. If you do it right, this approach will help you to improve your credit rating as well as make it easier to repay your debt with low monthly payments.
Opt for balance transfer
If you have a large number of credit cards and amount of credit card debts, then a second option is to transfer the balances of the existing cards into a new credit card. This card once again should have a lower rate of interest than the average rate of interest of all your credit cards combined.
- It is only have lower rate of interest you will have a lower monthly payment which in turn will help you to save a lot of money on interest.
- It is even better to choose a new card that has a 0% interest for a specific time, usually 18 months. This means you will have much lower monthly payments and much more savings.
However, you will just have to make sure that you pay off the balance within the introductory period.
Consumer credit counseling
This is another excellent way to consolidate debts because you will not need to borrow any money. It involves:
- Contacting a non-profit consumer credit counseling agency
- Have your finances thoroughly reviewed by an efficient counselor and
- Create a better budget or a debt management plan.
Such a DMP will consolidate all your unsecured debts. You will not pay your creditors any longer. Instead, you make a monthly payment to the consumer credit counseling agency. They will disburse that money to your lenders.
This is the most popular option since the Great Recession of 2007. There are several reasons for this such as:
- It saves a considerable amount of money by paying much less than the balances
- You can consolidate debts by creating a fund first in an FDIC-insured trust account instead of paying the unsecured lenders every month
- This process usually takes 24 to 48 months to complete depending on the amount of money you owe and agreed to pay.
Therefore, make sure that you choose the right debt consolidation option but also make it a point that you consider the consequences that may vary according to the specific option chosen.