There are thousands of American’s facing mountains of bills each and every month. Today more than ever before, people are trying to understand how to consolidate debt. There is a billion dollar industry comprised of debt consolidation companies that are waiting to make you an offer you can’t refuse. When you owe more money than you make each month, turning to a debt consolidation company sometimes seems like the only solution. However, If you have a little time and some serious determination you just might be able to get out of debt by consolidating your bills on your own. You might even try to consolidate debt online, although you may well find that the process needs to be more active and involved than an online process might appear to promise.
If you are a home owner, you could possibly have a pretty straight forward solution to your debt problem. First you must determine if there is equity in your home. Equity means that you have paid enough of your mortgage to a point where the value of your home is greater than what you owe on it. If you have a good amount of equity, you can take out a home equity loan. Then you can use this money to pay all of your debt and end up with only one monthly payment. Another option for those who have equity is to refinance your property for a larger amount than you owe and use that extra cash to pay your bills. This is known as ‘cash-out’ refinancing. While this option appeals to some people, consider the fact that you are stretching the repayment of your debt over 15 or sometimes 30 years. Will you even remember what you bought in 30 years? try to keep this option as a last resort.
Think for a moment about who and what you owe. Since you are reading about how to consolidate debts, you probably think about this all the time. Now you need to write down in detail exactly how much you owe to each individual creditor. Record on paper each creditor’s contact information, the total amount you owe and the interest you are paying. Taking this first step is critical to understanding how to consolidate loans. Rank your list of debt starting with the debt that has the smallest balance. Start to call each creditor on your list and don’t let your emotions take over. Be honest and state the facts. Tell them what you can pay each month or offer a settlement amount to pay the balance in full. Sometimes creditors will accept a settlement for less than half of what you owe if it means your file is closed and they don’t have to deal with it. It doesn’t hurt to ask.
If you don’t own your home or you simply can’t negotiate with your creditors, there is still hope. Get help from a non-profit community organized credit counselor. These groups help you figure out how to consolidate debt without making a profit, unlike many advertised consolidate loan companies. Non-profit credit counselors will provide confidential, free advice to members of the community. They will always work with your creditors to agree on a repayment plan, because even through they are not making a profit, they do get paid. The creditors pay them a percentage for setting up the payment terms. These local non-profit groups will not make the promise that all your debt will be cleared by making a small hundred dollar monthly payment. However, they can negotiate with the companies you owe so you can stop cringing when the phone rings or the mail arrives.
Remember you are not alone in this financial crisis. Millions of people are going through the same thing you are. Learning how to consolidate debt is the first step.