How To Clear Debt On Electric Meter

How to Consolidate Your Debt

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Debt can sneak up on you and, before you know it, you're overextended with medical bills, student loans and credit card balances. You might consider debt consolidation, but this is an important decision. Maybe you need help with debt collectors. Companies exist to help consumers resolve these financial issues too.

What is Debt Consolidation and is it for You?

Debt consolidation is a single loan you take out to pay off your debts. You then need to repay the new loan with monthly payments, which may stretch out over a longer time than the original loan terms. Sometimes, debt consolidation involves lower interest rates, but this isn't guaranteed. This option might be a good fit for some people. However, if you don't have a plan for changing your spending habits to avoid future debt, you will likely end up with new obligations to add to your debt consolidation loan.

Is Debt Settlement Really Worth It?

When debt collectors contact you about past-due loans or other debt, you might feel scared and overwhelmed. Never ignore debt collectors, because this makes issues worse. Ideally, you should never allow debts to get to the point where debt collectors are calling you. If you have trouble, always reach out to your debtors to arrange a reasonable payment schedule.

If it's too late and a debt collector is already contacting you, deal with the issue directly. Ask for a written verification of the debt within 30 days of the original contact from the collector. Once you receive this, verify that the debt is yours first. Assuming it is, deal with the collector to make arrangements to pay your debt. Get your agreement in writing before you make any payments. Make payments with money orders to avoid giving debt collectors information about your bank accounts. Make all payments until you pay off the debt.

Debt Management Programs

Debt management programs are designed to help consumers pay off unsecured debt. These programs aren't loans. Instead, they're designed to work as intermediaries between creditors and consumers, often reducing monthly payments and interest rates with reduced or waived penalties. Expect to make monthly payments to the debt management company, which will then make payments to creditors on your behalf. Many consumers require three to five years to pay off their debts using this process, and you will probably have restrictions placed on you that will prevent you from acquiring new loans during this period.

Always vet any organization before you proceed with a program to make sure it's reputable. The company may be non-profit, offering free debt counseling with certified counselors. Some companies also charge fees.

Debt Consolidation Calculators

A debt consolidation calculator can help you decide whether this is a good choice. Many websites feature these calculators, and you have to enter all of your loans and debts into the calculator to see what your monthly payment for a consolidated loan might be. You can also change terms and rates in the calculator to arrive at different monthly payments.

Use a Debt Consolidation Worksheet

If you're considering debt consolidation, a worksheet is another tool that will help you make a decision. The worksheet includes columns to list creditors, current balances, interest rates, monthly payments, the months until you have a debt repaid and the total interest you'll have paid. Once you have these facts about your finances, you can visit a debt consolidator to find out what your loan amount would be with an interest rate, monthly payment, term and total interest paid. Having these details will enable you to make an informed decision about the best way to proceed to manage your debts.