Payingoffdebt

Debt Consolidation Solutions Ways to consolidate your debts yourself

There are many options for a debtor to consolidate his debts in this day and age. The most common ones you have heard or seen so far are probably those commercials on late night television from debt consolidation companies that promise to help you fight and win over your debts.

There are also many government aid programs that seek to help debtors get out of debts. But these services usually require that you fulfill certain requirements and a minimum amount of debts before you are applicable to join their programs.

You can choose to consolidate your debts yourself if you know the options available for you.

Home Owners
The best option for home owners would be to take up a home equity loan to borrow against the value of your home. This can usually be done without any other mortgages. A home equity loan is usually a fixed amount of money repayable within a fixed period of time. These loans often offer the lowest interest rates and payment method.

Note that home equity loan interest can be variable and you also run the risk of losing your home if you fail to pay your loan.

People with Good Credit Rating
If you still enjoy a good credit rating, you can choose to consolidate your debt with credit cards. With a good credit rating, credit card companies are willing to grant you a lower interest rate if you transfer all other card balances to them. You can call all your card issuers to get a quote from them and compare them before you sign up the best offer available.

Remember to request for a fixed rate and to waive any transfer fees to transfer your card balances.

Life Insurance Policy Holder
You can have the option to borrow from your life insurance policy at a premium interest rate to solve your debt problems. The advantages is that you are not stressed up to repay this loan and that your life insurance benefits will be reduce by any amount that you borrow.

Different life insurance policies have different guidelines for borrowing. It is best to consult your insurance agent before you proceed to borrow against your insurance policy.

Do check out the above options if they are available to you. With good planning and actions, you will be able to clear your debts in 3 to 5 years.

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The number of people facing serious debt problems continues to rise inexorably, with recent research suggesting up to a million Britons could potentially be in genuine danger of bankruptcy. The situation will only get worse if, as predicted, the Bank of England starts to increase interest rates from their current historic lows, leading to higher mortgage payments having to be made from already overstretched budgets.

If you’re one of the many thousands facing real problems in meeting your repayments, you’ve probably been looking for ways out of your predicament, and you’ll probably have come across sites advertising debt consolidation and debt management as possible solutions. What’s the difference, and which one is right for you?

Debt consolidation is the simplest and most straightforward way of dealing with debt. The basic idea is that you take out another loan which is large enough to pay off all your current debts such as credit cards, personal loans, overdrafts and the like. This leaves you with one single monthly repayment to make, which is already a great step forward in making your finances easier to control.

By making sure that the loan you take out is at a comparitively low interest rate, you should find that your total monthly repayment is lower than it was when you were servicing many smaller, more expensive debts. Also, choosing a longer term to repay your new loan will lower the costs even more.

This sounds perfect in theory, but consolidation isn’t without its problems. Firstly, you’re not actually reducing your debt, just your monthly repayments. While this may take the pressure off in the short term, in the long term you’re likely to be paying more interest overall as you’ll be taking longer to clear the debt. You’re also usually shifting unsecured debt onto a secured loan, which could put your home at risk if you start to struggle with your repayments.

Debt management is an altogether different and more drastic way of tackling your debt. By entering into a management program, you’re handing over the day to day management of your debt to a company who specialises in negotiating with people’s creditors. This debt management company will contact everyone you owe money to, and try to negotiate lower repayments by rescheduling your debt, freezing interest, or even cancelling past charges and fees.

You’ll still be responsible for repaying much of the debt of course, but in many cases large amounts of your debt can be wiped out almost overnight. There’a also the advantage that you only have to make one repayment a month, direct to the management company, who will then distribute it among your creditors.

Entering into debt management can be a very effective way to reduce your debt and all but eliminate the stresses it causes, but there’s also a pretty major problem with it. You’ll effectively be breaking the credit agreements you signed, which will severely harm your credit rating for the future. However, once bitten by debt, you might not be too concerned about having problems taking out more credit in the future.

So which is right for you? Consolidation is a popular ‘quick fix’ and can simplify your finances considerably, at the expense of more interest being paid in the long term, and is a good choice for people who are struggling with their debt to a moderate level. Management is a more drastic solution, and should only be considered by people who really have little alternative, and who are unable to get a consolidation loan because of their credit ratings.

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If you are in debt problems, you are not alone. Statistic has shown that in our country on an average, people have eight credit cards and an average debt of 9340. High interest rate of 18-25% (mainly credit cards) is one of the reasons due to which debt has grown at a pace of 5% every year.

With an increase in debt problems across the whole nation, there is also a fast growth of debt consolidation companies and services surfacing. These companies usually offer easy solutions to help combat your debt problems but not without charges or fees.

If you are diligent enough, and know your financial health, you can consider consolidating your debt yourself and save your consolidation fees to repaying your debt.

To consolidate your debt yourself
You will need to negotiate with your creditors to lower your interest rate, and late payment fees which are usually the biggest barrier to clearing your debts. With that done, you will need to draft a budget plan and follow it diligently.

With that said, there are certainly more that that to consolidate your debts yourself. You can refer to this page to understand on how you can consolidate your debts: www.debtconsolidationcare.comdiy .There are three resources that you might find very useful here:

Creditors Database
Reveal a list of creditors and collection agencies, with their contact details and most importantly their standard creditors debt settlement policies. Knowing your creditors polices will help improve your chances of successful negotiation.

Sample Debt Consolidation Letters
Provide a list of letters with standard formats written to creditors for different occasions and purposes. There is also a mailing guideline to help you contact your creditors. For those who find it hard to pen a proper letter, this is really useful.

Debt Calculator
An advance and interactive debt calculator to solve and sum up difficult debt related calculations with a few clicks. Use this tool to calculate your monthly payment to help draft your budget plans.

When consolidating your debts, self discipline is very important. Make doubly sure that you are committed to your budget plan once its draft and you will soon live a debt-free life again.

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