In the following video Nicolette explains Debt Consolidation

How to get out of a situation where you can’t honour loan obligations such as paying your loan EMI. Here are 5 tips to get out of what is called as debt trap and take charge of your finances.
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Hello and welcome to FundooMoney, your 24X7 buddy for all your money matters. We have all heard about the word “debt trap”. But what exactly is it? Well, debt trap is situation where you have taken so much debt or loans that you find yourself unable to even service the monthly interest. You actually need a loan to pay the interest and hence end up increasing your debt. This is a vicious cycle created in the first place due to excessive and high interest rate borrowing. You need to create and work on a plan diligently to get away from this financial mess. Shortly, we tell you the essential steps that you need to take in such a plan.

Pay off high cost debt at the earliest
Prioritise all your debts based on interest rates. Get rid of highest cost debt such as those of credit card outstanding that typically charge 40% annually. If the outstanding amount is too large, take a personal loan or do a balance transfer on EMI on other credit card. This could bring the interest rate to a more manageable level of around 12-15%.

Consolidate medium cost debt
If you have many small value loans like consumer loans, personal loan or credit card dues, it would be better for you to bring all these loans at one place by taking a personal loan or debt consolidation loan at a low interest rate. You can interact with your lending institution for this.

Look for low cost alternative
If you have high interest rate loan like a personal loan, you could take a lower cost loan, typically loans against assets such as gold, car or property to pay off the high cost debt.

Try extending the tenure
If you are likely to find it difficult even to pay off low cost EMIs, consider extending the tenure of the loan to manage the repayment obligation. Secured loans should typically allow you to have a long tenure. This will keep the EMI under check. Once your income rises or you get any windfall gains, you can utilise that amount for faster repayment of your loan.

Liquidate investments if the need be
If all of the above steps are not enough, consider liquidating some investments such as idle gold or property. Try to view this move without emotion. Consider the loan repayment burden a cost of retaining these investments with you. Once outstanding loans are repaid, you could use the money to invest for your future.

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What is DEBT CONSOLIDATION? What does DEBT CONSOLIDATION mean? DEBT CONSOLIDATION meaning – DEBT CONSOLIDATION definition – DEBT CONSOLIDATION explanation.

Source: Wikipedia.org article, adapted under https://creativecommons.org/licenses/by-sa/3.0/ license.

Debt consolidation is a form of debt refinancing that entails taking out one loan to pay off many others. This commonly refers to a personal finance process of individuals addressing high consumer debt but occasionally refers to a country’s fiscal approach to corporate debt or Government debt. The process can secure a lower overall interest rate to the entire debt load and provide the convenience of servicing only one loan.

Debt generally refers to money owed by one party, the debtor, to a second party, the creditor. It is generally subject to repayments of principal and interest. Interest is the fee charged by the creditor to the debtor, generally calculated as a percentage of the principal sum per year known as an interest rate and generally paid periodically at intervals, such as monthly. Debt can be secured with collateral or unsecured.

Although there is variation from country to country and even in regions within country, consumer debt is primarily made up of home loans, credit card debt and car loans. Household debt is the consumer debt of the adults in the household plus the mortgage, if applicable. In many countries, especially the United States and the United Kingdom, student loans can be a significant portion of debt but are usually regulated differently than other debt. The overall debt can reach the point where a debtor is in danger of bankruptcy, insolvency, or other fiscal emergency. Options available to overburdened debtors include credit counseling and personal bankruptcy.

Other consumer options include:

debt settlement, where an individual’s debt is negotiated to a lesser interest rate or principal with the creditors to lessen the overall burden;

debt relief, where part or whole of an individual debt is forgiven; and

debt consolidation, where the individual is able to acquit the current debts by taking out a new loan.

Sometimes the solution includes some of each of these tactics.

The bulk of the consumer debt, especially that with a high interest, is repaid by a new loan. Most debt consolidation loans are offered from lending institutions and secured as a second mortgage or home equity line of credit. These require the individual to put up a home as collateral and the loan to be less than the equity available.

The overall lower interest rate is an advantage of the debt consolidation loan offers consumers. Lenders have fixed costs to process payments and repayment can spread out over a larger period. However, such consolidation loans have costs: fees, interest, and “points” where one point equals to one percent of the amount borrowed. In some countries, these loans may provide certain tax advantages. Because they are secured, a lender can attempt to seize property if the borrower goes into default.

Personal loans comprise another form of debt consolidation loan. Individuals can issue debtors a personal loan that satisfies the outstanding debt and creates a new one on their own terms. These loans, often unsecured, are based on the personal relationship rather than collateral.

Don’t just move the problem around, fix it and get your debt paid off. Contacting a certified debt counselor to help you handle your money and set up a budget will get you started.

In this video, learn how to choose your debt consolidation options, including mortgage refinance loans, debt settlement, and credit counseling. Hosted by Brad Stroh, Co-Founder and Co-CEO of Bills.com.

Debt consolidation options include refinancing your mortgage to pay off other debts, receiving credit counseling, or reaching a debt settlement with your lenders. We will review when each of these options is appropriate and how each will affect your credit rating, monthly payment, and time of enrollment in each program. He also reviews the long-term costs of each option. Before choosing one, determine whether your goals are lower payments or paying off the debt faster, and then contact a reputable provider to begin the process. Visit Bills.com for more personal financial advice and information.

Or go here to see ho we can help. https://debt.bills.com/debt/?utm_campaign=Bills+video&utm_term=ag#step1

In this video I go over when to use the equity in your home to refinance and pay off your credit card debt

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Ding dong the witch is dead! Which old witch? The credit debt witch! Here’s how I killed the wicked old witch of debt and eliminated twenty two thousand of credit card debt in just three years.

Credit counseling service I used: https://twitter.com/ClearPoint

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How Does Credit Consolidation Work

If you are asking yourself how does credit consolidation work, then it just means that you are in a debt situation. It may be that you are having a hard time tracking all the payments or you have trouble making the payments altogether. Regardless of the particular scenario in your financial life, too much debt only means one thing: you need a debt relief program.

Credit consolidation simply refers to any program that will combine your multiple debts into one easy and convenient payment plan. There are many reasons why you want to do this.

First of all, you want to keep yourself from missing out on your monthly payments. Bottom line is, it simplifies your payments. Instead of monitoring different creditors and sending payments at different times throughout the month, you make only one payment. This is very important because a lot of things will happen if you start being late on your due date. Your credit score could go down, harassing collection calls will start to take place and your debt amount can increase. You definitely want to keep your record clean by paying on time.

Another thing that credit consolidation can do is lower your monthly payments. There are two ways for this to happen and it depends on the specific debt relief program that you will pursue. With a debt consolidation loan and debt management, you get the lower payment by stretching your balance over a longer schedule. You can also lower your interest rate – although this is not a guarantee for debt management.

The other way that you can lower your monthly payments is through debt settlement. The purpose of this debt relief program is to reduce your balance by convincing your creditor that you are in a financial crisis. You want them to allow you to pay only a portion of your debt and have the rest forgiven.

Any of these options will help you pay down your debts. You only have to choose one based on your payment capabilities. Since debt settlement can give you debt reduction, this can be an option for people with low paying jobs or unstable ones. With a debt consolidation loan and debt management, you will need a more steady and stable paying job. That is because you will still end up paying for the whole debt that you owe. It will only seem lower because it is distributed over a longer payment period.

Although the debt reduction option of credit consolidation may sound like a good idea, you need to consider your options carefully. Debt settlement can ruin your credit score in ways that a debt consolidation loan and debt management cannot. But if you are really having a hard time raising the funds for your payments, then you need to let your credit score be damaged and just negotiate to settle your debts.

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