What is debt consolidation?
When your personal debt starts to mount, address it at the earliest. If you delay repaying the debt, it is going to cost you more. The interest rate goes up and you will have to make higher payments. Your credit rating also takes a beating. When you consolidate your debt, you will have just a single creditor or a small group of creditors to make repayments to. Credit card debt consolidation can ease your payment burden by reducing your credit card debt payment significantly.
Getting deals on debt consolidation loans
There are many ways of going about debt consolidation. The following are some of the sources you can tap for getting the best deals on debt consolidation:
- Local credit unions or banks that you already deal with.
- Local banks you have never dealt with. They may help you because they can win a new customer in the process.
- Person to person lending sites which will allow you to borrow directly, without the involvement of a third party.
Clinching the best deal on debt consolidation
The following are five ways to get the best deal on debt consolidation:
- Interest rate arbitration: With this system, you select an independent third party, who is an arbitrator, to negotiate low interest rates with your creditors. The arbitrator is in no way connected with either the lender or borrower. You can consolidate multiple bills into one low monthly payment. This is called loan consolidation and it improves your credit score.
- Debt management: You can manage your debts by paying them off. A debt solutions company will aid you in this by examining your cash flow. You can save on interest and late fee may be waived too.
- Debt settlement: For this you will need the services of a settlement company/law firm, which will undertake to negotiate with your creditors for a lower settlement figure.
- Chapter 13 bankruptcy: Don’t tap your assets. Use this court-monitored repayment schedule to repay your debt. The creditors bring down the interest and principal you owe.
- Chapter 7 bankruptcy: Dispose off your assets with the help of a court-appointed trustee, who will take charge of the assets and sell them. Settle your debts this way. The interest and principal you owe also comes down.
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