Debt Consolidation – When Should I Consolidate My Debts?
When is the right time to consolidate?
This is a question lingering in many of us’ mind. You do hear a lot of pitches from debt consolidation companies, trying to win your business. You also read a lot about the benefits (and pitfalls) of debt consolidation. Does this mean that you should consolidate your debts because the experts say and claim that it’s good for your personal finances? This article is here to shed some lights on when you should use debt consolidation services.
Should I consolidate my debts because of my multiple debts?
The answer is: Not quite necessary.
What defines as “a necessary condition” for debt consolidation is, indeed, the existence of multiple debts. However, you don’t have to do loan consolidation just because you have multiple loans. The basic rule of thumb is that if you can cope with your loans and loan payments, then you are not necessarily need to do debt consolidation. Of course, you may think of restructuring your loans and paying some loans off so you can get the best terms and rates possible.
Should I consolidate when I receive debt collector’s calls?
Yes – you should start looking for debt consolidation options when you start receiving credit collection calls. Credit collection agents are persistent as most of them are getting paid through commission. ‘Bad’ debt collectors would even trying to harass you so you will feel annoyed enough to start making some payments.
If you are exactly in such situation, the best way is to find and contact a reputable debt consolidation company. There are debt consolidation companies that can offer you free consultation, and give you contacted the right ones, they can certainly help you sort you financial problems through. They can give you more options, such as in-house debt financing or, most commonly, helping you find a good debt consolidation loan and even helping you negotiate your current loans with your lenders or creditors.
Do take note, though – this type of debt consolidation can impact your credit record. Nevertheless, the professionally guided debt consolidation is best if you really and truly need help with your financial situation.
When is the perfect time for debt consolidation?
First off, you should ask yourself the following questions:
1. Do you have more than two existing loans?
2. Are you overwhelmed by your loans’ vary monthly due dates?
3. Do you have to call customer service on regular basis to ensure your interest rates?
4. Have you ever missed one or two due dates because of a payment mistake (e.g. forgetting the due dates, sending payment to the wrong creditor, etc.)?
5. Are you having a default on one or more of your loans?
6. Are you barely paying for the loan interest and not starting to pay for the principals?
7. Are you having difficulties in meeting minimum due payments?
8. Are you posting out at least a check per week?
If most of your answers to the above areYES, then it’s probably the right time for debt consolidation, when the problem is at the early stages. At this point, you can obtain a secured loan (e.g. home equity loan) and use the proceeds to pay every loan you have. This will not impacted you credit record that much – in fact, doing this could help you improve your credit record.
To sum, the right time for debt consolidation is when you are having trouble keeping up with multiple debts but are still having the control of your personal finances.
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