You may have heard of debt consolidation as a way to get out of a financial bind with debt. But what is debt consolidation, what are the ways to consolidate debts, and how can debt be consolidated? Let’s dive right in and cover the essentials about debt consolidation, debt relief strategies, and what your best options may be.
Signs Debt Consolidation Might Help You
While debt consolidation may be beneficial for some, it’s not for everyone. What are some of the signs that debt consolidation might be a good option for your current circumstances?
Maxed Out Or Over The Limit Credit Cards
One of the clearest signs that you might benefit from consolidating your debt is having credit cards that are frequently or always maxed out.
While a well-managed amount of debt can be useful for getting your essential needs met, constantly using credit cards at their max just to get by can trap you with heavy interest charges and payments.
The good news is, there are some options for taking control of your credit card debt. One option is debt consolidation, which combines all of your debt into a single payment.
Difficulty Making Your Payments On Time
If you’re having trouble affording your monthly payments every month on time, or if it’s a struggle every time to have the money, debt consolidation might help you. If your credit cards or personal loan debts are making it hard for you to stay afloat, debt consolidation could be your best option.
Frequent Stress About Your Financial Situation
Stress from financial struggles can strain relationships and make it hard to feel motivated each day. The effects of this can build over time, making it even harder to get ahead. Alleviating your financial stress by consolidating your debt can get you back on track for a brighter tomorrow.
What Debt Relief Strategies Are Possible?
When getting out of debt seems like a never-ending struggle, what options do you have? Not every form of debt relief help is right for every financial situation. Bankruptcy, debt consolidation, and debt settlement are some options. So what are some other possibilities?
Is There A Government Program To Help With Debt?
Unfortunately, the only government-related option for debt reduction is bankruptcy, and that results in long-term credit damage. One alternative that has a lesser impact on credit is debt settlement, which reduces debts but still requires repayment, unlike bankruptcy that wipes it clean.
Can My Debts Be Written Off?
Typically, if a debt is written off by an original creditor like a credit card company or medical office, the debt is purchased by a collection agency that then tries to get payment. The debt doesn’t just go away. That said, after seven years, the statute of limitations expires, and the debt can no longer be pursued using legal remedies. Of course, that also means seven years of negative marks on your credit—a bad tradeoff.
Other types of debt help can alleviate your debt faster and with a much shorter impact on your credit score.
Can Credit Card Debts Be Forgiven?
Credit card companies don’t really forgive debts completely. At best, a credit card company might accept a settlement offer to pay off the account for less than the total balance. Sometimes that can be in the form of a lump-sum payment or series of payments. Once a credit card is past due or over the limit, many fees and extra interest get tacked on to the balance. Alleviate Financial Solutions assists people with getting credit card relief by assisting in the debt negotiation process, often saving them thousands in fees and interest.
What Are The Ways To Consolidate Debt?
Consolidating Unsecured Debts
Unsecured debts are most commonly what people think about when they talk about consolidating debt. This includes credit cards, personal loans, and past-due medical bills. When these payments become too much to handle, debt relief companies like Alleviate Financial Solutions can combine all of these into one simple payment that has a more defined end date for you to work toward. Also, this method may even stop collection calls if things are to that point.
Consolidating Simple-Interest Loans
Car loans, home loans, and student loans are all simple-interest loans, meaning there is a defined end date to the loan with a specific total interest charge. This is different from credit card debt that charges interest on the balance of the debt each and every month, inflating the total interest charges to astronomical amounts over time.
Typically, simple-interest loans aren’t eligible for debt consolidation or are not financially feasible because the interest savings aren’t nearly as massive as with credit cards.
Consolidating Debt By Transferring Balances To One Credit Card
Sometimes credit card companies offer low-interest “deals” for transferring balances from other credit card companies. Be wary of these because sometimes the rate is only for a short amount of time, and the long-term rate could wind up being higher than what you’re currently paying. Always read the fine print on these types of offers.
What’s the Difference Between Debt Consolidation and Debt Settlement?
There is a difference between debt consolidation and debt settlement. Consolidation is a debt relief program that simply combines your unsecured debts into one account with one payment, helping you escape debt faster. Debt settlement is when you or a company like Alleviate Financial Solutions negotiates with creditors for balance reductions that slash interest and fees, along with putting an end to collection calls. This option is better for people who just want to get out of debt and stay out.
Debt Consolidation Help From Alleviate Financial
Getting the best debt advice is crucial, and Alleviate Financial Solutions is here to help you find the smartest option for finally escaping your unsecured debt.
While chapter 7 bankruptcy can clear your debts, it requires a lengthy court process and comes with a serious negative impact on credit for ten years.
On the other hand, debt consolidation still provides relief from heavy debt payments while only affecting your credit for the few years that the debt is being paid down.
Debt consolidation assistance from Alleviate Financial Solutions helps people in tough financial situations get relief from debt that’s become too hard to manage.
Call Alleviate Financial Solutions today to learn if debt settlement can help you.