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So, you are wondering if debt consolidation is right for you? Could there actually be some kind of help out there that would give you a boost to get yourself out of debt? But you have that nagging feeling in the back of your mind. You say to yourself, “It can’t be…this would be too good to be true so it can’t be legit.”
On the other hand, you might say to yourself, “What if this is the answer to my prayers? Could this actually help me? Shouldn’t I give it a shot?”
Those are both too totally reasonable reactions. It can be so confusing. You don’t want to be the fool because you fell for a scam that promised you to help with something that you want so badly.
Then again, you hate to pass up an opportunity for the helping hand that you are so needing.
Is Debt Consolidation Right For You???
Truth be told, it is super confusing…
There are many different views and opinions out there about if debt consolidation is a good choice or a terrible decision. You hear many horror stories about how these services rob, cheat and steal from vulnerable people who are just looking for a way out.
Then, you hear about the success stories from people who had success consolidating their debt, saving huge amounts of money every month on interest alone and cutting years off the debt repayment process.
It is really hard to figure this out when you hear so much conflicting information….
Here is the thing. Debt consolidation can be an awesome tool to help you get out of debt, or it can be a huge mistake. That is because it is not a one size fits all solution.
There are many factors that are involved in determining if debt consolidation is the best choice for you or if you are destined to be one of those horror stories you have read about.
Let’s figure out if this option is right for you…. But first, you must understand what debt consolidation is meant to do.
What debt consolidation can do for you…
Lower Interest Rates
Debt consolidation can be used to lower the amount of interest you are being charged by credit card companies. If you are in credit card debt, then most likely over half of your monthly minimum payments are going on paying the interest every single month.
This is the reason many people have such a difficult time getting out of credit card debt. By consolidating your debt into a lower interest rate, you will end up paying more of the principal rather than interest. This will allow you to pay your debt off quicker.
Help Manage Debt Easier
By consolidating your debt, you will be combining all your debt into one monthly payment making it much easier to manage. You will be paying a set amount of money every month to only one creditor with one due date. This will make it so much easier to manage than making half a dozen payments every month with different due dates.
Lower Monthly Payments
Consolidating your debt will result in lower monthly payments giving you the ability to make ends meet if you haven’t been able to do so. Lower monthly payments might also allow you pay more money on your debt every month and intern, speed up the process to becoming debt free.
Who Debt Consolidation is Not For….
First, let’s dive into some reasons why someone would not be a good candidate for debt consolidation.
You have less than $10,000 of debt
I am a big believer that you must try to get out of debt yourself if it makes sense. I also know that $10,000 is a huge amount of money if you are in debt. The thing is, it’s not impossible to pay that off in a year or two if you set your mind to it.
Of course, it does take planning, changing your ways, reducing expenses and implementing money-saving strategies among other tactics, but you are going to need to do these things anyway.
If you have less than $10,000 in debt, check out Realistic ways to save $10,000 a Year Without Feeling Deprived for some great tips on cutting costs to pay down debt.
You are not willing to change your ways
If you are going to use debt consolidation just to free up some money to keep doing the same things that got you in debt in the first place, then this is not right for you. Debt consolidation is a helping hand that can be very beneficial to anyone serious about getting out of debt. It’s not meant to fund a lifestyle that you can not afford.
If you are just hoping to free up money on your credit cards so you can continue using them to fund your unrealistic lifestyle, you will be in big trouble at some point with no place left to turn for help.
If it will result in higher interest rates
Typically, loans, such as debt consolidation loans among others, have a lower interest rate than credit cards do. This is the very reason that consolidating debt helps you get out of debt faster. It saves you money on interest and allows you to put more money on the principal owed.
With that being said there are some instances when you can end up paying a higher interest rate. One, you have really bad credit. If this is the case, then you should do what you need to do to improve your credit enough to get a decent rate. I know that you may be thinking, “how could I improve my credit rating if I am in so much debt”. Well, even though your debt to credit ratio is not good, there are other things that you can do to improve your credit. Check out 5 Steps to Improving Your Credit Score to see how.
Secondly, you may be looking in the wrong place for help. I won’t kid you, there are many companies out there that will take advantage of people just to make a buck. If this happens, look somewhere else. Accredited Debt Relief is a great option, they are an accredited Leander with the better business bureau.
Debt consolidation is your only plan of action
Debt consolidation is a big piece of the puzzle to get out of debt, but the work doesn’t stop here. You still have to work at it, you need to come up with a plan to control your spending, manage your money and find ways to save money. Not to mention having a plan to be able to live below your means.
If you don’t have a clue how you are going to accomplish these things, then you may want to figure all that out and create a debt repayment plan before considering debt consolidation.
Who will benefit from debt consolidation…
Congrats, you’ve made it this far so I’m guessing this means that you might be a good candidate to be able to benefit from consolidating your debt. Let’s find out…
Debt consolidation is a tool you can use to get out and stay out of debt. If you are willing and ready to do that, then debt consolidation can be a great resource to help you speed up the process, reduce interest so you can pay more on your debt instead of interest and help you manage your debt.
You are determined to get out of debt
Motivation is a major factor to getting out of debt, you must be all in if you want this to work for you. Are you so sick and tired of being in debt that you are willing to do whatever you need to do to get rid of it?
So here is the deal, getting out of debt is really hard. Even if you do consolidate your debt, you still need to put in the work. This is not an easy button. If you are ready, will and able to do whatever you need to do, then debt consolidation can be a great tool to help you get there faster.
You must have a stable source of income
As you probably know, you won’t get approved for a debt consolidation loan if you do not have a way to pay that loan off. You need to be able to prove to the lender that you have enough income to pay your loan and are going to be able to see it through until it’s gone.
Depending on how much you need to pay off, this could be a 5-year commitment; not only for you but for your lender. They need to make sure that can follow through until the end.
You should have a decent credit score
As discussed earlier, your credit score does play a part in determining if you will get approved and how much interest you will be paying. Any company that is willing to help consolidate your debt needs to do whatever they can to make sure they will get paid.
With that being said, you don’t need perfect credit. You may have some dings on your credit score and still qualify. Maybe your credit score took a hit because you got injured and couldn’t work for a few months, hence becoming behind on your payments.
Maybe you have been laid off from a job that could afford you to pay your debt. You are still working but for less money and having trouble making ends meet.
Things happen… all the time. What will determine if you are a good candidate is if you have shown that you have been a good credit risk in the past; and will be a good credit risk going forward.
You have a plan
You’re aware that you need to change your ways. You already have a plan to get out of debt and are going to follow through with it until you reach your goal of becoming debt free.
You’ve crafted a plan to control your spending. You put a budget in place to be able to manage your money better, you have found ways to cut your expenses and start living within your means. Those traits alone can allow you to get out of debt on your own. But also know that consolidating your debt would be a huge help.
Are you a good candidate for debt consolidation? If so, you can check out how much you will be saving by consolidating your debt with this simple calculator.
Debt Management and Debt Settlement are two other options that you might want to consider depending on your situation. Accredited Debt Relief can help you out if there might be a better fit for your situation.
The debt management program allows you to:
- Get out of debt much faster
- Reduce your interest rates
- Help with Collection/Creditor Calls
Accredited Debt Relief meticulously examines your individual circumstances and carefully outlines a strategy to affordably manage your debt. Their team of debt management experts then implements a number of proven solutions tailored to your individual needs. Accredited Debt Relief’s successful debt management program includes expert credit counseling to reduce your interest rates and fees.
The debt settlement program allows you to:
- Reduce Your Total Unsecured Debt
- Coordinate Program terms available for 24-48 months
- Resolve Debt Obligations as an Alternative to Bankruptcy, Debt Consolidation or Credit Counseling
- Get Assistance with Collection/Creditor Calls
- Set Aside Funds With One Low Monthly Program Payment
Accredited Debt Relief connects you with a team of expert negotiators. They will help work out affordable settlements directly with your creditors. Their debt settlement affiliates tailor the debt settlement program to your individual needs. They will negotiate a payment arrangement that works for you.
You know that getting out of debt is hard. It may even seem impossible, but there is help out there if you are willing to help yourself. Fill out this simple form and Accredited Debt Relief will tailor a plan to fit your needs and situation.