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Guide to Debt Consolidation and Other Relief Forms

Guide to Debt Consolidation and Other Relief Forms

If you have had credit cards for several years, you may have accumulated some personal debt.

Unfortunately, debit is easy to obtain but not so easy to pay off. This can cause a negative impact on your credit score, which can make it more difficult for you to obtain a good loan offer if you want to buy a house or car.

If you are in poor financial health, this can cost you more money long-term because you will usually be required to pay higher interest rates. 

However, there are several different debt relief options you can take advantage of to help you regain control of your finances.

Just because you are in debt does not mean you are out of options. Whether you want to take advantage of debt consolidation or other repair methods, you can learn how to manage your debt.

The following sections outline different credit card debt consolidation methods you can use, as well as how to determine which option is best for you.

By learning how to manage your debt now, you can save yourself hundreds or thousands of dollars in the years to come. 

Learn About the Benefits of Debt Consolidation

Debt consolidation is a popular form of debt management you can use to help make sure you pay your bills.

This option is especially beneficial if you have numerous forms of debt and have trouble keeping track of when your payments are due.

This way, you are only responsible for paying one payment each month. If you have a substantial amount of high-interest credit card debt that is keeping you trapped with monthly payments, debt consolidation can also be a good option for you. 

Before you contact one of the debt consolidation companies to help you manage your debt, make sure you understand how this method can help you. Some of the benefits of debt consolidation include: 

  • Lowering your monthly payments. If you are looking to get out of debt and save money, consolidating may be a good option. This is especially true if you owe on several credit cards that come with high interest rates that are costing you substantial money. When you consolidate, you only pay one interest rate each month. 
  • Keeping better track of your payments. You may have fallen into credit card debt because you were consistently late on your payments. By consolidating all of your payments into one, you only have one date you need to remember. 
  • Proving you have a management plan. Debt is intimidating. However, if you take the steps toward consolidating your payments, you can prove to yourself and others that you have a plan for managing how much you owe. 

How to Consolidate Credit Card Debt 

If you are wondering how to get out of debt, keep in mind that there are two main ways you can consolidate how much you owe.

The first is to put all of your existing debt onto a credit card that comes with zero percent interest during the first year you have the card. 

This option is especially appealing if you believe you can pay off all your debt within the introductory year. To take advantage of this method, talk with your bank about interest-free credit card options you qualify for. 

Alternatively, you can consolidate your debt by taking out a loan. Low-interest options are available through different providers.

Depending on your circumstances, you can apply for a personal loan and pay the creditor directly. Alternatively, you can take out a loan through a lender who will pay your creditors for you.

Be sure you understand each option to determine which one might be best for your situation. 

In any case, make sure you only take advantage of these debt relief programs if you have a strategy for managing your debt in the future.

Otherwise, consolidation will not work. This means you need to have plans to: 

  • Increase your income to help you afford your monthly payments. 
  • Reduce your spending so you do not accumulate more debt. 
  • Keep track of how much you owe so you have a reasonable expectation of when you will be out of debt. 

Where can I get a debt consolidation loan?

If you are looking for a debt consolidation loan with bad credit, you will likely have more difficulty finding an option that suits your needs.

Similar to other loans, debt consolidation loans charge higher interest rates to borrowers with lower credit scores. This is because credit scores indicate the likelihood that the person who takes out the loan will repay the debt. 

However, if you have a qualifying credit score, there are different lenders who can help you consolidate your debt.

Many different companies offer loans to individuals who are looking to manage their finances in this way. For example, some companies that offer loans include: 

  • SoFi. 
  • LightStream. 
  • Upgrade. 
  • Avant. 
  • LendingPoint. 
  • Rocket Loans. 

About Other Forms of Debt Relief

Debt consolidation is not an ideal form of relief for everyone. In fact, individuals who do not have effective plans to manage their debt can actually increase how much they owe or how long they owe for if they choose to consolidate their payments. 

For these reasons, it is important that individuals research which forms of debt relief will be most beneficial to them in the long term.

There are a few other types of debt assistance you can take advantage of, and some of the most common forms are: 

  • Credit counseling. If you need help determining the best financial strategy for you, consider speaking with a counselor. These individuals are trained professionals in the consumer finance field, and they can offer you advice on how to manage your debt. 
  • Budgeting. If you do not want to work with a credit counselor, you can establish your own budget. With this method, it is important that you determine the best strategy to help you pay off what you already owe, and eliminate the possibility that you will accumulate future debt. 
  • Bankruptcy. Declaring bankruptcy is an option you should not consider lightly. If you cannot manage your debt, filing for bankruptcy can help give you the opportunity to start over without losing your livelihood. However, doing so will cause major damage to your credit score in the future. This, in turn, can cost you more money, should you need to take out a loan again.