There are millions of people across the United States who have to deal with the constant problem of not having enough money to pay their bills. They may have debt from student loans, credit cards, mortgage, cars and many other types of debt. However, when it comes down to it, the debt needs to be paid or the company that holds the debt will continue to hound you for a long time to come and your credit score could be severely damaged. That much you know, but what can you do about it?
For some, debt consolidation may be the answer. A first step in debt consolidation is to figure out exactly how much debt you have. Take a look at all of your debt. This means car loans, home loans, boat loans, RV loans, credit cards, gas cards, store cards, home equity loans and student debt. You may even have additional types of debt that do not apply to these categories. Check it out ASAP! You want to be sure that you are covered in case you end up having to pay the debt back.
The second step in debt consolidation is to figure out how you are going to repay the debt. The obvious answer is money and yes, you do need to have money to repay your debt. However, you do not have to have cash in order to repay your debt. First, you need to figure out if you are going to take out a debt consolidation loan to repay all of your debt or if you are simply going to start with your highest interest/highest balance debt. Whatever you decide, make a plan. Draw it out on a piece of paper that will show you how much you have to pay each month. Pay more if you can afford to so that you are living the debt free life as soon as possible.
Some people are able to take out loans on assets that they already have paid off. A good example of this is something like a car or boat that has already been paid for but can be used as collateral for a loan. Most banks do not like giving out large loans without having at least some type of collateral. Depending upon the size of your loan and your credit score, a lender may require you to have collateral available. NEVER use your house as collateral on your debt consolidation loan. While many people are tempted to use the value they have stored up in their house, failure to pay could lead to default. Defaulting on a HELOC can end up causing people to lose their homes.
Deciding how to deal with large amounts of debt is undoubtedly overwhelming. Talk to your creditors and ask what options they have open for you. Some might be willing to agree to settle on amounts that you owe them for less than the full balance. Other creditors might have a list of credit support groups that will help you through your debt problems by establishing a plan that fits your income. Whichever path you take, the important thing is to act now and get out of debt as quickly as you can!
This guest post is brought to you from the UK debt help site Nicon Group, a leading UK resource for all your debt problems.