Tips To Consolidate and Pay Off Debt
Dealing with debt is hard on all of us. It becomes even harder when you need to pay a number of creditors at once. In this scenario, you are left to decide what debts to pay off first and which ones to let sit unattended to for a while.
Some debtors out there choose to split their income between all debts, paying off a little fraction at once. This might sound logical, but it does not always work. At some point, you may want to think about debt consolidation, which essentially means you need to compound all your debts into one and come up with a single payment plan. So, how do you consolidate and pay off your debt in record time?
1. Find out how much debt you owe in total
For most people, debts are spread amongst a number of creditors. In order for you to be able to come up with a consolidation plan, you need to know how much debt you owe in total. This involves the simple process of taking figures from each source and adding them up until you have exhausted your creditor list.
2. Consider taking out a debt consolidation loan
This one is rather simple; you can take out a loan that allows you to pay off all your debts. After you have managed to settle any pending payments, then you free up your resources in that you only need to pay instalments on the new loan as all the others have been settled. Chances are that you get to pay reasonably lower interest as well.
3. Apply for a debt relief
If your options seem narrow, then you can always try this. You start out by contacting companies that negotiate (at a fee) with your creditors to reduce your monthly repayments an APR. In some cases, the debtor is allowed to pay back money owed in a lump sum. As a token, they are allowed to pay less than the total owed amount. Some of the options for this include an IVA or Trust Deed if you are based in Scotland, DMP, DRO or as a last resort bankruptcy.
4. Consider borrowing from your retirement plan
This works for most of the plans out there as they allow you to take out loans against your retirement account. The problem, in this case, is that there are some serious downsides to going this way, such as penalties and income taxes. This form of debt consolidation is considered risky and should only be done when the alternative is pulling out of your retirement plan altogether.
5. Credit card balance transfer
Low rate balance transfers will allow you to shift your balances to a single credit card, with the condition that your new credit card has an accommodating credit limit. If you are looking at a restrictive credit limit, you could just choose to move two or three of your high-interest balances into the new plan. If you are looking for options to consolidate your debt, then we provide a lot of up-to-date information on that. There are lots of choices out there, and you have to decide what works for you in the long term.