Bill or Debt Consolidation

Bill or Debt Consolidation

Bill consolidation is the process to taking all your outstanding bills and putting them into one, a consolidation loan. Instead of paying separate bills, you make one payment to the debt management or bill consolidation company. This payment also contains any fee the company charges. There are many companies that will help you do this called either bill consolidation companies or debt management companies. The idea of bill consolidation is to eliminate your short-term debt within 5 years.
If you find and use a reputable company, you should be able to become debt free, have only one monthly payment, eliminate collection calls, avoid bankruptcy, waive late fees, and lower your interest rates and monthly payments.

So how do you know if you need a debt-consolidation loan? If you it find it difficult to manage all your bill payments, you cannot deal with several creditors at the same time, you are not current on your bill payments, or you want to save some money and put all your bills into one easy payment.

You should do some things before you go to a company to pursue a debt consolidation loan. Take a good hard look at your monthly income and work out a budget for yourself. Figure out an amount that will be comfortable to pay on your loan. Next calculate your total debt amount; this will let you know how much you need to borrow. Then decide which bills you are going to use the loan money for. Lastly, check your credit report so you can see what problems you can fix with the consolidation, and to make sure there are no surprise judgments or collections against you. Bill or debt consolidation can also help repair your credit.

A home equity loan is another option for bill consolidation, as your home will be used for security by the lender. Shop around before you do this or any kind of bill consolidation loan. You will get better rates if you have a steady job, a decent credit score and in the case of the home equity, how much you already have invested in the house. Many credit-counseling agencies will assist you with this. They will help you reduce your monthly payments. Naturally, all of these options have fees involved. Usually it is about 30-40 percent of the amount of money they save you.

Debt that is secured (such as a car loan) cannot be included in bill consolidation loans. Unsecured debt can be. This includes credit card debt, student loans, and medical bills.

It is possible to save money with a bill consolidation plan but how much will depend on several factors. A lower rate than you already have on your consolidation will mean you will pay less in the long run. The longer you take to repay your debt consolidation loan the more you will pay overall.