A debt consolidation program helps you pay off your unsecured bills through an easy and single monthly payment plan. This program enables you to make only one payment instead of 7 or 8 every month.
Here’s a detailed analogy of how the process of Debt Consolidation Happens
Are you worried about paying your credit card bills owing to the high-interest rates? Why won’t you be?
After all, you need to pay all the EMI’s of your dream car, house and the latest gadgets that you always wanted to buy irrespective of the debt consequences. However, you are not alone in this world that has these problems. There are many others as well, and for them, Debt Consolidation is the best way to manage your debt.
Debt Consolidation will help you reduce your interest rate, your monthly EMI’s value and eventually eliminate it.
Here are the best ways to reduce your debt –
Search for Reduced Interest Rates
If you get a lower interest rate, then a significant portion of your payments will pay off your loan’s principal amount. It will help you pay off your debt faster. Here’s how you can get a lower interest rate –
- You can request a lower interest rate from your credit card provider.
- Opt for a credit card with lower interest and transfer your pending balance to it
- If the transfer is not possible, then reduce the balance towards a card with a lower interest rate. Low-interest rates will minimize credit card charges.
Consolidate Debt With Loans or Line of Credit
Debt Consolidation can help you manage your monthly payments with ease and help you reduce the interest to a much lower value than your previous interest rate. The best ways include –
- Apply for a debt consolidation loan and then pay the monthly payment for the first time at a reduced rate
- Instead of taking another loan to pay off the first, open a line of credit and repay with each usage
Opt for a Better Method of Paying Off Your Debts
Once your debts have been consolidated into loans and few payments, but the debts that you can repay first as a priority and then the later ones as secondary ones. Here is the easy solution for the above process.
Pay the loans with the higher interest rates first
The advice is to deal with the loans with the highest interest rates first because the interest starts piling up more. Hence, if the loan with the higher interest rates are easy for you to pay, we suggest you spend that first as it will reduce your financial burden. However, think twice if the loan with the highest interest rate is the highest valued loan that you have. In that case, it will take longer to pay off the debt and will increase your financial burden.
Pay smaller loans first.
If you pay off your smaller loans first, it might reduce your overall debts, and you can move towards the bigger ones with a better and much-relaxed mindset.
HOW CAN THESE PROGRAMS HELP YOU START A NEW FINANCIAL LIFE?
- Help you make the lower payment every month.
- Help to reduce the number of calls you get from creditors
- Leave you with only one monthly payment plan
- Help you repay your bills within 2-5 years
- Help you improve credit gradually
- It May help you knock out the fines and late fees
You can check out the benefits of these programs to know how they help you get a fresh financial start.
WHAT BILLS CAN YOU PAY OFF THROUGH THE PROGRAM?
- Credit card bills
- Store cards
- Personal loans
- Medical bills
- Collection accounts
- Other unsecured bills
Student can pay their loans through secured or unsecured debt consolidation loans.
WHAT FACTORS DO YOU NEED TO CONSIDER BEFORE THE CONSOLIDATION OF DEBT?
How much you want to consolidate?: A company may require a minimum amount of debt for you to enrol in the program.
How much you’ve to pay on fees?: Check out the fees and calculate whether or not you’re able to pay the amount every month.
How much you need to pay for an interest rate?: The main benefit of consolidation is to lower interest and reduce monthly payments. However, repayment term should not be more like opting for it may result in more spending in the long run.
HOW DO DEBT CONSOLIDATION PROGRAMS WORK?
Check out these five steps to know how to do debt consolidation programs work:
- No-obligation free financial analysis – Debt counsellors make a thorough review of your income and expenses, along with your debts, to decide upon an affordable amount you can pay every month.
- Sign a written agreement – You can ask questions (such as fees, monthly payment amount, etc.) during the counselling session. If you’re happy and satisfied with the session, you can sign up for debt consolidation services.
- Get relief from the creditor calls – Once you’ve cleared your doubts and signed required documents, the counsellor starts negotiating with your creditors to lower interest rates and eliminate late fees. They also put forward the payment plan.
- Make one payment to the company – After the counsellors finalize a payment plan, which all the parties accept, you start making the single monthly payment to the company. The consolidation company then disburses the amount amongst your creditors.
- Re-assessment of your financial situation – Usually, after 180 days, the counsellor asks you about your financial situation. If it has become worse, notify the counsellor so that he/she can re-negotiate a new payment plan with your creditors as per your current situation.
HOW CAN YOU GET THE BEST DEBT CONSOLIDATION PROGRAM?
- Ask for a free consultation with First Option Recovery.
- Find out customers’ views regarding the company.
- Get detailed information about the program.
- Need to know your financial obligations
- Prioritize your creditors
The right way to choose the best debt consolidation program is to make a comparative analysis of your financial obligations and prioritizing your creditors.
WHAT ARE THE REASONS BEHIND THE POPULARITY OF ONLINE DEBT CONSOLIDATION?
- You can get a fresh financial start
- Your payment process can get accelerated
- You can get debt consolidation help 24*7
- Easier for you to make your monthly payments quickly
- You can compare various online companies from your home
- You can get free counselling online and save time
- You may get a fast debt consolidation service
A debt management program or plan (DMP) is a method to pay your debts at a decreased interest rate. With this plan’s help, you can become debt-free within 4-5 years.
WILL YOU GET DEBT MANAGEMENT HELP ONLINE?
Yes. Debt management help is available online. Make sure you read online articles and review the credentials before requesting a debt management company.
WHEN AND WHY OF DEBT MANAGEMENT PLAN
When you should go for a DMP
- You earn a decent amount every month.
- You can pay a certain amount every month.
- You want to repay your outstanding dues in full.
- You can change your lifestyle to follow your budget.
- You are facing problems in managing your multiple bills.
- You can pay professional fees to the debt management company.
WHY YOU CAN TAKE HELP OF A DMP
- You can have a positive influence on your credit report.
- You can have a stress-free time to enjoy
- You’ll get a reasonable monthly repayment plan.
- You can start working on repairing your credit.
- You can save money when you have paid your debts.
- You’ll get fewer calls from creditors regarding payment.
DMP – HOW DOES IT HELP YOU GET A TOTAL MONEY MAKEOVER?
You can get a complete money makeover through debt management help. Here’s how;
CONTACT YOUR CREDITORS & REQUEST FOR INTEREST RATE REDUCTION
The debt management company will contact your creditors and reduce the interest percentage. It will become more comfortable for you to pay debts.
DISTRIBUTE THE AMOUNT AMONGST YOUR CREDITORS
Once you make the company’s payment, it will distribute the amount amongst your creditors as per the agreement.
OFFER TIPS TO MANAGE PERSONAL FINANCE
The counselling agency or debt management company will offer a free counselling session. The counsellor will provide you with practical tips to manage the financial situation and repay debts through it.
OFFER A DEBT MANAGEMENT PROGRAM
The company will offer a DMP if you cannot manage money all by yourself.
- Plan a reasonable budget to follow: The counsellor will provide you with an appropriate budget, following which you can save money.
- Decide upon a monthly payment: The counsellor will also decide upon an affordable amount, which you need to pay to the company, every month.
STEPS TO CHOOSE A DEBT MANAGEMENT PROGRAM
- Try to manage your multiple bills yourself.
- Plan a budget, cut down unnecessary expenses, and use the money to repay your debts.
- Search for a reliable credit counselling agency
- If you can’t manage your accounts independently, you can help a credit counselling agency. Search for a licensed credit counselling agency in your state.
- Take the help of a credit counsellor.
- Follow the budgeting tips to save money and repay debts offered by the counsellor.
- The agency can provide a DMP.
If you can’t manage your finances independently even after following the budgeting tips, the counselling agency can offer you a debt management program.
KNOW THE TIME TO REPAY DEBTS IN FULL
- Before you enrol, ask how many months it’ll take to repay the outstanding balance in the multiple bills.
- Ask how much you need to pay monthly.
- Make sure you can comfortably make the agreed-upon monthly payment to the debt management company.
FOLLOW THE PAYMENT DISBURSEMENT TO THE CREDITORS
- Ask on which date payments will be disbursed to the creditors so that you can track expenses. It would help if you got monthly statements with payment details.
- Know about the fees you need to pay
- Ask how much you need to spend as professional fees for the debt management plan.
KNOW HOW TO PROTECT YOUR PERSONAL INFORMATION
- You should take help from a reliable organization so that your personal and financial information remains secure.
- Get everything written in details.
- Before you enrol in the plan, make sure you get everything written down and go through it carefully.
SIGN UP IF YOU THINK IT’LL SERVE YOUR PURPOSE
You should enrol in the plan only if it suits you. You should be able to make the required monthly payment.