Is debt consolidation something you’ve heard of? Most people have heard the term, but many do not understand what is involved with debt consolidation. Fortunately, you will soon learn some useful information. If you wish to try debt consolidation, you need this article. It will provide you with some important information that can help you to make the best financial decisions for your unique situation.

TIP! Don’t make a debt consolidation choice just because a company is non-profit. It is a common misconception that this label indicates a firm is a step above the rest.

Get a copy of your credit report before embarking on the debt consolidation journey. First, you need to figure out how you got into debt. Find out what you owe and to whom. You’re not going to be able to develop a solid plan in which you make different choices in the future if you don’t do all of this.

Look to see if a debt consolidation company’s counselors are qualified. Are these counselors certified by any specific organization? Is your counselor legitimized by working for a reputable company? When you know this, you will know whether or not you should choose the company in question.

TIP! Find out more information about the interest rate for the debt consolidation. Fixed interest rates are the best.

Do you own a life insurance policy? Cashing in your policy will allow you to get out of debt. Call your insurance agency to see if you can cash in your policy. Sometimes you can pay your debt by borrowing a portion of your investment.

If a credit card company has offered you a card with a low interest rate, consider using it to consolidate debt. You may be able to save money on interest charges this way. After your consolidation to one card is complete, try to pay it off prior to the expiration of the introductory rate.

TIP! Make sure you thoroughly investigate any potential debt consolidation firms. Use reviews written by clients to find a professional who is reliable enough to help you manage your finances.

Call your creditors and ask if you can negotiate lower interest. You may be surprised to learn that the average creditor will settle for far less than you owe, and sometimes that amount is as low as 65%. This doesn’t negatively affect the credit rating and may boost your score.

It is good news that your credit rating is generally unaffected by debt consolidation. Some debt reduction plans harm your credit, but the main effect is to reduce your high interest rates and combine your obligations into one. This is a very effective method, but only if you keep up with the payments.

TIP! Are you a homeowner? If so, it may be a good idea to refinance your home and use the extra cash to pay off some of your debt. Mortgage rates are at an all time low, making it the perfect time to consolidate your debts using this method.

Your 401K might help you to pay off debt. This should be done only if you know you can pay the money back into your retirement fund. If you are unable to, you may have to pay a penalty fee or taxes.

Spending Habits

TIP! Consider a loan to get rid of your debt, and then you are in a position to negotiate settlements with creditors. You would be surprised to know that a creditor will more often than not accept around 70 percent if you offer a lump sum.

Money issues won’t disappear by just getting debt consolidation loans. Debts will keep being a problem for you if your spending habits don’t change. When you have a debt consolidation loan, take a look at your spending habits to see what can be worked on to improve your financial future.

Negotiate your debt during the debt consolidation process, before you agree to anything. Ask if your credit card provider will move you to a fixed interest if you quit using the card. You don’t know your options until you ask.

TIP! If you are unable to get a loan, sometimes a friend or relative can help out. Be sure though that you spell out the terms of the agreement and know exactly when the money needs to be paid back.

Ask how much you will be charged by the debt consolidation service. Any company in this field should be have at the ready a detailed structure of their fees. They have to perform a service before asking for any pay. Don’t agree to pay them fees to set up your account.

Debt Consolidation Firm

TIP! Complete all documentation from the debt firm thoroughly. You don’t want to make any mistakes.

Make sure you know the physical location of your debt consolidation firm. Some states may lack licensing requirements for opening a debt consolidation firm. Make certain your company isn’t doing business in one of these states. This information should be something you can easily come by.

When consolidating debts, you want to have one payment that’s affordable each month. Try working for a 5 year payment plan, however longer or shorter plans can be considered. This way, you can work towards a goal and know when you will pay off your debts.

TIP! Find out about any hidden fees that a debt consolidation company may charge. They ought to give you a mapped out fee structure that outlines their services.

A good debt consolidation company is going to help you become debt free without charging you through the nose. Make sure to take their classes and workshops to make your financial situation better. If your debt consolidation counselor does not offer these resources, find another agency.

Make a list of every creditor you owe, and list detail about each debt. It’s important to list what you owe on every debt, the amount of interest on each and when payments are due. You will need this as you move forward with your debt consolidation.

Interest Rate

If you have several debts, figure out your average interest rate. You are able to compare this number to the interest rate offered by the debt consolidation companies to ensure you have made a good decision. If you already have a low interest rate, you may not need debt consolidation.

TIP! Florida and Maryland do not require debt consolidation professionals to get a license. If you live in once of these areas, you may want to think about choosing a company from another state.

Don’t forget that when you miss a payment, this shows up on the credit report, and it will have bearing on what interest rate you will pay on your consolidation loan. Pay the debts monthly, even if they’re not full amounts, and make sure the loans have a low rate.

Now you understand debt consolidation. Do your research and consider which options work best for you. By doing so, you’ll be sure you’re taking care of your finances in the best way.