|
Debt consolidation shouldn't be the first step you take when you wind up in financial trouble; it ought to be one of the last, followed only by declaring personal bankruptcy. Although debt consolidation is advertised as a simple solution to debt troubles, it comes with troubles of its own, including the temptation to accumulate more debt after your credit card balances are eliminated.
Consolidation can be difficult, particularly if you do not have a house. The easiest way to consolidate existing debts is to take out a home equity loan. Equity loans are inexpensive when put side by side with other varieties of loans, and the interest is deductible from your income tax. If you do not have a home, how can you take out a loan?
If you don't own a house, you can still find financing to consolidate your debts into a single manageable one. There are several options available to you:
A personal loan - Not likely for many borrowers, but you might be able to get an unsecured loan from a bank or a credit union, especially if you have a relative or friend who is willing to cosign the loan. Keep in mind that if you do not pay, your cosigner will be legally responsible for paying back your debt. You don't want to lose friends or relatives over a loan.
A credit card loan - It's possible to borrow from a credit card, if necessary. A few credit card companies offer temporary, affordable loans for balance transfers if you open a new account and transfer a current balance over from an old one. This can lead to trouble; failing to heed the cardmember agreement by making a late payment could cause your rate to rise dramatically, which will make a bad situation worse.
Consolidation agency - There are professionals who can assist you with your money troubles. consolidation agencies can create a management plan that will allow you to repay your debts. They can also negotiate with your lenders and creditors to possibly reduce fees and reduce interest. Consolidation companies are often profit-seeking companies; you must pay them a fee to use them. On the other hand, it may be your only solution if you can't find other sources of funding.
Fixing financial trouble can be a tough chore. There are quite a few ways to do it, and it is possible to do so even if you don't have a home. It just takes a bit of effort and patience.
|
