Debt consolidation programs can help you deal with unsecured debt legally so that you can start improving your financial health. Professional nonprofit credit counseling provides useful tips for managing your money, and trained counselors can negotiate with your creditors and reduce the interest rates that you pay. Credit card debt carries high interest, and most of your monthly payments go to pay interest, which keeps your balances high.
When to Seek Debt Relief
You should investigate debt consolidation any time you have more debt than you can comfortably pay. Credit counseling programs usually deal with unsecured debt, but counselors will include payday loans, credit card debt, hospital bills, utility bills and other unsecured loans when creating custom debt management plans for consumers. If you face the following situations, then you might benefit from consumer credit counseling and debt consolidation:
- You need to take out cash-advance loans to tide you over until payday.
- You routinely use your credit cards to pay bills.
- You never have enough cash to get through the month.
- You often pay bills late because you need to wait on your next check.
- You write postdated checks to cover expenses or write checks for amounts you hope to cover before the checks are cashed.
Advantages of Debt Consolidation
An Alabama debt consolidation service at https://www.creditguard.org/states/Alabama/ looks at your underlying financial health and designs repayment plans based on your income, debts and resources instead of what your creditors want you to pay. Truthfully, lenders want you to stay in debt and continue to pay interest, and you need to take strong measures to get out from under oppressive bills. Benefits of debt consolidating programs include the following features:
Fixed Interest Rates
Credit loans can have variable interest rates that make budgeting and planning a nightmare. Understanding your exact obligations makes it easier to plan your monthly spending.
Reduce or Eliminate Penalties
When you need debt consolidation help, you probably have missed a few payments or paid some bills late, which makes your situation even worse because lenders tack on penalties and fees. Credit counselors often persuade creditors to drop these fees.
One Monthly Payment Covers All Unsecured Debts
Your affordable monthly payment pays each of your creditors based on a percentage formula. Lower interest rates mean that more of your payment goes toward reducing your balances.
Improve Your Credit Standing
Debt consolidation never reduces your legitimate loan balances, but sticking to your agreement satisfies your creditors and protects your credit rating. Creditors stop making annoying collection calls.
Take Back Your Debt-Free Life
You might have difficulty remembering how simple life was when you didn’t have any debts. Debt consolidation can help you retire your debts within short periods so that you have more monthly income to save for retirement and put aside money for an emergency fund. Experts recommend that you keep a financial cushion of two to six months of your pay to help you deal with emergency situations. Once you have some security, you can begin to save for ambitious family goals such as starting a business, buying a home, taking a vacation or paying for your children’s college educations.