Debt Consolidation Programs
Every year, people from all walks of life use debt consolidation programs to regain control of their debt.
Doctors use them to reduce their personal debt.
School teachers use them.
Plumbers and bus drivers use them.
People from every corner of American society have taken advantage of them.
But to succeed with them, you need to find the right program.
You need to find a program that fits your financial picture, one that accomplishes your goal of debt reduction without being too difficult or too extreme on your lifestyle. So how can you find programs like that? That's where we come in.
Simply view the list of options and choose the one that meets your individual need.
Okay, let's get going.
5 Debt Consolidation Programs & Options
Before we begin, there's something you need to know before you start searching for third-party programs...
In the beginning, you should always try to organize and pay down debt on your own.
That's always the best move to make first... before you even think about searching for third-party programs or another type of debt plan. After all, why enlist the services of someone else and pay their fees to do something that you can do yourself. Without question, you save way more money this way.
However, for those that have already attempted to reduce debt on their own but came up short, this list of programs is for you.
The programs aren't listed in any particular order because you must decide which one best fits your situation. It's important to be honest with yourself about what will work for you and what won't. This honesty helps you choose the right option and also helps you avoid a lot of regret later on.
Here are the programs for debt consolidation you can use...
Debt Consolidation Loans
This is where you get a loan at a lower rate to pay off your credit card debt. For example, if you're paying 22% interest on your credit cards, you can get a consolidation loan at a lower rate of 11% or something in that range.
You would be cutting close to 50% of interest and you can structure the loan over a longer period of time. Those two things reduce the amount of money you would pay every month and makes this one of the best debt consolidation programs if you qualify.
There are 3 types of loans for debt consolidation...
- Traditional debt consolidation loans: This where you get the loan from a traditional bank or credit union. Qualifying for these loans nowadays is a little more difficult. Lenders are more stringent.
- Peer to Peer loans: With this option, you get a loan from individual investors. While your credit is still used for this loan, you might be able to find some sympathetic investors.
- Home Equity loans as a means to consolidate: This is where you use the equity in your home to get a loan and roll your debt into that loan. The interest on your new loan would be lower than what you're paying on your cards right now.
If you combine one of these loans above with some good old fashioned cost-cutting, you could be back on track financially sooner rather than later. But if the cost-cutting isn't part of your planning, this solution becomes just a short-term fix. And it's a fix that won't last long at all. In fact, one could make the argument that it's just as important as the solution you decide to go with.
For more info on this program, you can check out our guide to getting debt consolidation loans online.
With a debt settlement program, you have another company negotiate with your creditors on your behalf. If they are successful, you'll have a lower debt to pay off and you only have one bill to pay. Although a program like this has gotten a bad rap, it can work if you find a trustworthy firm that won't take your money and run.
By finding a firm that will do the right thing with your debt, you won't suffer through the misery that many other people have gone through because they chose the wrong one. However, if you go with this option, it's a good idea to keep checking up on them to make sure the payments are being made on your behalf.
Never leave anything to chance. Especially when it's this important.
Here's how it works...
...a third party debt company talks to your creditors for you, and asks them to reduce the amount of money that you owe.
If your creditors agree to a settlement, they forgive a certain percentage of the money you owe. In return, you will offer your creditors the remaining balance in a lump sum payment.
For example, if your creditors agree to forgive 20% of what you owe, then you would only have to pay them the other 80%. So if you owed $20,000 - then you would only have to pay back $16,000.
That's a significant amount of savings for these types of debt consolidation programs.
Zero Balance Transfer Credit Cards (0%)
When you use this strategy for consolidating your debt, you are simply taking the debt you have from your current credit cards and transferring it to cards that have a lower interest rate.
In fact, for the first 6 to 12 months, you can get an interest rate of 0%. Here's an example... if you are currently paying 15% or more on your cards, you can transfer the debt to another card from a company that offers zero balance transfer credit cards.
If you plan it right, these credit cards can play a big role in getting your finances back in order.
Keep in mind that this offer is usually only available for 6 or 12 months. Actually, some are now even offering 18 to as much as 21 months. Then the rates go up to whatever the company states. Be sure to read the fine print with this card. And make sure you have a plan for paying off your debt before the rates go up.
These types of credit cards have become very common. However, you do need good credit to qualify for this type of credit card. If your credit isn't in good standing, then you probably won't qualify.
If your credit is good, then you should give this debt consolidation program serious consideration.
Credit Counseling & Education
This solution educates people about the best way to manage finances. If you cannot afford to pay all of your bills every month, a counselor can help you set up a household budget and they also show you how to better organize your finances.
This is not a typical program. It's basically an educational type of solution. A credit counselor educates you about money, budgeting and finance in general. They offer you the materials that you need to learn about managing your finances better.
After a thorough evaluation, your counselor may recommend that you enter into a debt management plan.
Before doing so, they will make sure that this approach is right for you. They also help you understand everything about the management plan.
Their job is to help you make an informed decision.
That completes our list of credit card debt consolidation programs that you can use to beat back debt.
If none of the plans listed above works for you, it might be time to start thinking about the dreaded 5th option...
Bankruptcy: Your Last Resort
This should be your very last option.
In fact, you should try to avoid bankruptcy at all costs and go with one of the other debt relief programs that we mention above.
The reason that most experts consider this the last resort for people with money problems is because the negative effects last longer.
For example, bankruptcy will be a mark on your credit score for up to 10 years. That will make it more difficult to acquire credit for buying a home or car. It may even affect your professional career because employers will be able to see that negative mark on your record.
And you also can't discharge some of your debts such as student loans, your back taxes and other fines owed to the government.
Keep in mind that laws for this option vary by state.
Take Back Control of Your Finances...Today
Whether you're thinking of going with the "do-it-yourself" option, or you want to use one of the reputable and legitimate programs that we mention above, it's up to you to finally get started.
You have to take that first step to do something about your debt. One of the reasons people don't tackle their credit card debt earlier on is because they think they aren't capable of getting out of debt.
They become self-critical and question their ability to make the right choices. They question whether they possess the follow through that's required to succeed.
So they put it off until their debt gets to epic proportions. Don't let that happen to you. Today is as good a day as any to get started.
By using the right debt consolidation programs at the right time, you can transform your monthly costs into something more manageable.
And you say good-bye to financial stress and anxiety.