Debt Consolidation

Lower Debt Bills When You’re Jobless

One of the biggest fears you face when you get your pink slip is your ability to either provide for yourself or provide for yourself AND family. If only you didn’t have debt: house, car, school loans, credit cards, you’d probably rest a lot easier. But these become larger than life scary beasts round about 4 a.m. when you’re lying awake in the dark.

Debt consolidation has been one of the more traditional debt relief options. Maybe you’ve even been pitched on debt consolidation loans in the last year or so, as the national credit situation has worsened.

Debt consolidation doesn’t reduce your debt, a debt consolidation loan typically lowers your monthly debt obligation, but it does so because it stretches out the repayment term and could raise the interest rate or lower it, depending on the terms.

Debt Consolidation Services and Companies

Typically you have consolidation options with a number of types of businesses, including:

• Consolidation with your bank
• Consolidation through your credit card company
• Consolidation through a credit or debt management company
• Consolidation of student loans through a student loan provider
• Other ways to consolidate debt.

Consolidate Debt with Your Personal Bank

Your personal bank offers possible debt consolidation options. But perhaps the most valuable service is free financial counseling, much of it available online. Should you have problems making payments on your home or credit cards, make an appointment with a bank account manager.

Debt consolidation tools your bank offers:

Secured personal loans sometimes called consumer loans

Home equity loans

Other refinancing options

Debt Consolidation with Your Credit Card Company

Sometimes credit companies extend somewhat attractive loans to their credit card customers, essentially allowing you to roll over what you have from your fat credit card balance. While these deals can sound nice at the time, remember that before you sign, read everything. Questions to ask:

• Amount of monthly payments
• Length of repayment
• Total repayment (this is where you really see the cost of your debt and the consolidation)
• Penalties for early repayment?

Consolidation Services Through a Debt Management Company

Credit counseling or debt management companies thrive in recession. Millions out of work, you can bet they are selling services. First make sure you only deal with a reputable and legitimate debt management company when it comes to consolidation. Look for Association of Consumer Credit Counseling Agencies affiliation, Bureau Veritas certification, and possibly the Better Business Bureau symbol of trust when shopping online or off. A debt management company, under the terms of the Fair Debt Practices Act, is required to provide you with free financial education, counseling and ensure your privacy. Their job is to custom create a financial management plan that allows you to make payments while also providing for yourself and your family, this through consolidation of your unsecured debts.

Consolidating Your Student Loans 

The federal student loan program has traditionally had a federal consolidation loan built in. However, in recent years, given the break-up of Big Student Loan and now the credit crunch, many of these programs have been pulled—many lenders in the Federal Family Education Loan Program have stopped offering the product. Where you have a private student loan you might find a private consolidation loan offered. Should you need relief from these hefty debts check with your student loan provider directly for any consolidation products.

Other Debt Consolidation Options

Debt consolidation, per se, doesn’t necessarily mean a formal debt consolidation loan. In fact you might be able to mastermind your own debt consolidation.

Shop carefully for low interest, no transfer fee credit card transfer options—you know the ones, you probably get them in the mail rather frequently. If your current credit card(s) is packed with a huge interest rate that’s killing you, call a company that’s offering you a low-cost transfer alternative and find out what terms and conditions apply.