Ideas On How to Consolidate Your Debt
Before you decide consolidating your debts, you should first look at all of your options. You may want to look at a Chapter 13 bankruptcy, attempt to pay down the debt yourself, get a consolidation loan from a lending institution or use a debt consolation service. What will work best for you is dependent upon your particular financial situation.
The first thing you need to do is determine how much income you have each month and what your liabilities and expenses are. If you owe more than you have coming into your household, you need to think about contacting a bankruptcy attorney. They usually offer a free consultation. Bankruptcy is a last resort, but you can find out quickly from an attorney if you even qualify for this. A Chapter 13 bankruptcy will consolidate most of your debts into a single payment that is paid to a court appointed trustee. At the end of your payment period you will be debt free. When you consolidate debts through a Chapter 13 filing, it is a judge who will determine how much of your debt you can afford to pay.
If you feel that you are overwhelmed with debt and you want to avoid bankruptcy, it may be possible to get a consolidated loan. If the debt you have is unsecured and you have a steady job, there are many lending institutions that may give you a loan that will pay off your debt and allow you to make a single payment. This consolidated loan will be for a fixed amount of time. After you have paid the loan off, you will be out of debt. The one downside to this is that there will be no reduction in the amount of the principle that is due.
A debt consolidation service company is another option. They will be able to create a consolidated loan but may also be able to reduce the principle on some of your debts. This reduction in principle is one of the most attractive aspects of this type of service. Without a reduction in principle you should try to get your own consolidated loan yourself. At this point you can compare the cost of a loan with the debt consolidated package offered by the debt service company.
The biggest problem with a debt service company is that the business regulations vary from state to state. Some of the laws are unclear and it is easy for many unscrupulous business types to set up shop, take your money and leave. If you do decide to go down this road rather than using a lending institution or an attorney for Chapter 13 bankruptcy, then make sure you do your research on the debt service company.
The most important aspect of a legitimate company will be that they are members of the Better Business Bureau. Although it is possible that an outstanding business in not a member, the chances of a company being both a member and a scam are very low. Once a debt service company has earned the seal of approval from the BBB, the chances of dealing with a good company are greatly enhanced.