When you decide to do something about your debts, consider debt consolidation or debt settlement. Start by contacting a non-profit that specializes in debt counseling. They don’t typically charge for the counseling session, and an experienced debt consolidation agent can help you determine whether settlement or a debt consolidation loan would work better for your situation.
Debt Settlement in a Nutshell
People with significant debt of more than $15,000 or those with low credit scores find it easier to settle their debts. Many debt counseling non-profit agencies offer settlement programs to help individuals get out of debt quickly. The debtor agrees to close all of their credit cards and registers every creditor with the program. In exchange, the non-profit contacts each creditor and negotiates a lower total payment, monthly payment, and interest rate for the debtor. Each month, the individual makes one payment to the non-profit, which distributes it to the various creditors.
Debt Consolidation Loans
People with higher credit scores who can qualify for prime interest rates can quickly pay off their various debts and pay one payment per month by taking out a personal loan. A debt consolidation loan provides the debtor with a single loan in the amount of their total debt. A debt consolidation agent typically won’t recommend this option to someone with a lower credit score because they won’t qualify for the loan. Interest rates for these types of loans can reach more than 34%, so it’s vital to qualify for a prime interest rate.
Financial Management Counseling
Non-profit debt counselors won’t simply tell you which option would work best in your situation. They recommend free or low-cost financial management counseling through their agency. Most people who reach the point of needing to consolidate debt also need to learn to live within their means and how to manage money. Simply helping a person apply for a consolidation loan from Symple Lending won’t help them learn to manage money. Only financial counseling can do that.
Financial counseling does a second important thing. It helps the individual uncover underlying issues that trigger their bad spending habits. For example, people with diagnoses of anxiety, depression, and bipolar disorder may experience moods that cause them to spend more than normal. A person with bipolar disorder experiences manic moods in which they may buy things at high volume. Once the person’s manic cycle ends, they may enter a depression over money they wasted and their finances in general. Although medication helps regulate the mood swings, financial counseling can help them learn techniques of money management that can help them more quickly repair their finances.
Get Started on the Road to Better Financial Health Today
Contact your local or state nonprofit debt counseling agency. Set an appointment and find out the methods you can use to clean up your finances and pay off your debts today.
