Loan Credit Consolidation - Advice And Information

Posted in: Debt Consolidation Loans in onlineloans's Blog

The Federal Trade Commission (FTC) oversees lenders and lending practices. They even provide free, reliable public education on lending practices. The webpage that this information came from ran several printed pages long, with very small type.

SELF-HELP
There are things that you can do to get out of debt yourself long before you take more sweeping measures, like debt consolidation. Your local public library has many of the same books as your major bookstore, but for free. May as well start right in controlling expenses.

Next, contact your creditors and let them know that you are working on making ends meet. If you're going to debt consolidation, do it before it gets to the point of going to collections. If it does, your creditor cannot call you before 8 am, after 9 pm or at work (if your employer disapproves). Lenders often work with people who are willing to pay. Your car can be repossessed any time you are in default. Do your best to pay this loan. It's your best alternative.

Your home loan is a little more forgiving. If you have temporary hardship, they may even be able to wait for your payment. It's your tax dollars at work.

DEBT CONSOLIDATION
Debt consolidation loans may be able to lower your interest rate and your monthly payment. Be aware that failing to pay it may cost you your home. Also, these debt consolidation loans generally take one to two months to close and require plenty of documentation.

Other forms of debt consolidation loans are available, but are not discussed by the FTC.

CREDIT COUNSELING AND DEBT MANAGEMENT PLANS
A credit counselor can help you work on your debt when your own efforts have failed or stalled. Some charge outrageous, hidden fees or steer you into a debt management plan (an extreme form of debt consolidation). You want a certified credit counseling agency that is a member of the National Foundation for Credit Counseling.

A good certified counselor teaches you how to budget and evaluate your debts. They may even be able to refer you to the best place to secure your debt consolidation loan.

A Debt Management Plan (DMP) is not credit counseling or debt consolidation. At the end of your DMP program, your debts are paid. It is not a good alternative to debt consolidation. However, with a very good company, a DMP can assist in the long run. Just be very careful. First, you should not have to pay high or monthly fees for credit counseling or a DMP. You should not hear a request for a "voluntary contribution" for either of these programs or a debt consolidation loan.

They should send you free information without first getting personal information. If you feel pressured to enroll in a DMP or they don't review your financial situation first, leave. You should not be enrolled in a DMP without first learning budgeting and other financial skills. Finally, your creditors must accept you into a DMP before you make your first payment. Basically, these programs inform your creditors that you are one step away from bankruptcy. And even if they do get some debt forgiven, that debt is reported as income to the IRS, who taxes you on it. A certified credit counselor will rarely, if ever, steer you this way. DMP's are the extreme measure. Don't land in bankruptcy looking for the best deal on debt consolidation.