Bad Credit Debt Consolidation
Have you found yourself with too much debt and no idea how to pay it? Maybe you’re currently in this situation because of a job loss, a bad business deal, too many loans or too much credit card debt. Whatever the case may be there is always a solution, even for the most dire of circumstances. Before you consider a consumer proposal or even bankruptcy you need to think about debt consolidation.
What is Debt Consolidation?
Generally speaking debt consolidation is when you consolidate or combine all you debts under one larger loan so that you only have to make one easy to handle monthly payment; typically the main goal is to get a lower interest rate so you can pay off your debts quicker. You can apply for a specialized debt consolidation loan that is specifically meant to help out those who need to work on paying down their debts. If you have a more manageable amount of debt, but still want to work at paying it off, you could take out a small personal loan and try a do-it-yourself debt consolidation.
Debt Consolidation with Bad Credit
If your credit has been damaged because of the debt load you’re currently carrying there’s not need to panic as it’s still possible for you to get a debt consolidation loan. For people with bad credit we suggest that you get in contact with a professional credit counsellor or a company with a debt consolidation program as they will be able to help you throughout the whole process. A credit counsellor will help you manage your money and debt as well as plan a budget for you. There are many programs that specifically deal with debt consolidation and bad credit, asking for the help you need will allow you to take back control of your finances and work towards finally being debt free.
How Debt Consolidation Can Help You
If you’re currently looking into debt consolidation and feel as though it’s the right option for you here are a few of the advantages you can look forward to:
- You’ll have less to worry about
You’ll be surprised at how consolidating you debts into one easy to handle payment will make your life significantly less stressful.
- Fees are usually manageable
If you choose to work with a professional credit counsellor you’ll have to pay a fee but it’s usually manageable and it won’t affect your ability to pay off your debts.
- Lower interest rates
The main goal of a debt consolidation loan is to get a lower interest rate. This means more of your money will be going towards paying off your actual debts and you’ll become debt free faster.
- You’ll be put on a schedule
While some might not consider this an advantage, being placed on a payment schedule not only means you’ll be accountable to someone but you’ll know your debt free date which is a great motivator for most people.
- Your debts are consolidated in one place
All your debts are combined under one loan. Instead of dealing with different creditors, you take out one loan to pay them all at the same time thereby, giving you more control over your finances. You will also have an easier time keeping track of your debt repayment and you finances in general.
More Options Available to You
Debt consolidation is a great option for many people who are currently being weight down by their debt load but it’s not the only option. To make sure you’re making the best choice possible for your situation it’s always best to compare your options and then chose the one the best suits you.
- Personal loan (DIY debt consolidation). If you don’t want to work with a credit counsellor or a debt consolidation firm you can always take out a small personal loan and consolidate your debts on your own. Just make sure the interest rate isn’t higher than the ones you already have.
- Credit cards. While we wouldn’t necessarily recommend this for everyone if you can find a credit card with a low interest rate then it might be a good option. Just remember that transferring the balance of one credit card to another is called a balance transfer and comes with its own set of fees so it might not be worth the extra cost.
- Debt management program. This option is great for those who need money management help as well as debt repayment help. You’ll work with a counsellor who will negotiate with your creditors, create a repayment plan for you and help you work out a budget.
- Debt settlement programs. This is the only option where you might not have to pay back all the money you owe. You’ll work with a counsellor who is negotiates your debts down into a more manageable sum. This is will have a negative effect on your credit score.
Whichever option you choose, be sure to search for the best loan terms. It should be your number one goal to get a lower interest rate, no matter what option you go with. You should also make sure to get the best monthly rate for paying off your debt. Choose a monthly sum that works best for you as debt consolidation is meant to make your debts manageable. In the long run, debt consolidation will help you maintain your credit score. Having bad credit doesn’t mean you should give up paying back your debts. Finding the best option that works for you can help you take control of your debt and start to restore your bad credit.