People want to have a luxurious lifestyle. As a result of this, knowingly or unknowingly, they accumulate high credit balances as a result of mortgages, high-interest credit card debt, and expensive lines of credit. Either they fail to weigh the scale of affordability, or they overestimate their sources of income. Little do they realize that they are creating trouble for themselves! It is hard to get out of the bubble of debt as you take one more debt to repay the previous one. This not only reduces your credit score (making it difficult to take any more credit) but also leads to a stressful situation. What can you do if your bills are more than your income? How do you deal with this situation, and what are the options available for debt recovery? This post will help you answer all such questions.
How to approach debt consolidation agents?
There are agencies that help you in this process. You can’t go to a bank or credit agency as they would require a cosigner and collateral for approving the loan. Additionally, they will offer a higher rate of interest because of your low credit rating. If you opt for peer to peer lending wherein a group of people crowdfund a personal loan, then you need to be aware of high-interest rates. It is difficult for a group of people to provide loans to an individual with a low credit score.
This is where debt consolidation companies come into the picture. They know the scenario and your position, so they know what you need. They offer plans based on your income statement for a specific tenure on which you pay monthly installments. This loan allows you to meet your expenses comfortably. But you need to ensure that before accepting this debt consolidation loan arrangement, you compare products to find the one which is best for you.
Before accepting a debt consolidation loan, you need to consider whether the interest rate is low enough compared with other loans that you have applied for.
- If the terms and conditions of your loan are flexible and exclusive.
- The period you are willing to pay back installments in a month.
- If the loan is for a particular, considering the terms and conditions of loans may be difficult without research.
Easy to apply
Debt consolidation is one of the effective options available for debt relief. It is easy to apply as the debt consolidation company will ask for your personal details, like name, address, and SSN, along with your monthly income and outstanding debt details. It is a straightforward process as they are knowledgeable on this line of rescuing their clients from the mountain of debt.
No more defaults
Follow the monthly plan that you have settled for and setup auto-debits for the installment.
Debt consolidation companies send a congratulations note when you are progressing at a great rate. What should you do? Celebrate by patting yourself on the back, and make the best effort not to fall into the same vicious cycle again! Have you already calculated the month of the last payment when you will have paid off your debt? There you go! You have a bright future!
Pro tip: Even if you have a steady income, stay away from accumulating credit. For instance, if your income is $100, you can afford to repay credits of $60 but this means you are running at a 60% risk of getting caught in debts! A saving of $10 can also go a long way, so never underestimate short savings. Read more about debt consolidation before you choose to enter into any agreement.