Do and Don’t of Debt Consolidation
The concept of debt consolidation is attractive to many people. After all, if you have numerous debts, trying to pay every bill every month can be a challenge. In addition, firms that specialize in debt consolidation loans make the loans sound appealing. While consolidation of your debt is often a good idea, in some cases, it is important to understand the process so you can make a wise decision. We’ve put together some “dos” and “don’ts” about debt consolidation that will help you discover if it is a smart decision for your situation.
Do’s of Debt Consolidation
- Do Talk to Your Mortgage Lender – Depending on what type of loan you currently have, you might be able to refinance your mortgage or borrow from the equity and actually lower your monthly payments. A cash-out refinance loan is an amazing debt consolidation option for many individuals.
- Do Try Settling Your Debts – If you have old debts or are behind on your bills, lenders may be willing to work with you and settle these debts for a percentage of what is owed. Then, if you do choose a cash-out refinance, for example, you will be in a better position to take advantage.
- Do Choose a Plan That Puts Cash In Your Hand – Agreeing to a debt consolidation plan that will leave you broke and struggling is a mistake. A cash-out refinance loan, for instance, can be an excellent way to consolidate your debts and give you the cash you need to stay current with your obligations.
Don’ts of Debt Consolidation
- Don’t Fall for Hype – If a company is offering a deal that sounds too good to be true, it probably is. Check around and get second or third opinions before you agree to anything.
- Don’t Agree to a Plan You Can’t Afford – If you discuss a debt consolidation plan with an expert, and the monthly payment is something that you will struggle to pay, don’t agree to it. If you will struggle, it is not worth it.
- Don’t Get Scammed – There are numerous companies out there offering debt consolidation services or loans. While most of them are legitimate, there are scam artists. Ask your mortgage lender or another trusted financial advisor what your next step should be.
If you are like many people considering debt consolidation, you are doing so to make life easier—perhaps to give yourself a better work/life balance while still saving for the future. You do not have to make these financial decisions alone. Remember, your mortgage lender, bank, and other experts are available to help you find answers to your questions. If you are considering the possibility of debt consolidation, or you aren’t sure how to get your debts under control, reach out to us at Liberty Liberty. We are always here for you.