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Answer a couple of basic questions about your debt. Based on your location, debt amount and type of debt, we can recommend a path.
Your certified debt resolution specialist will show you how to pay off your debt and give you the motivation to get there.
Follow the payment plan you agree to with your certified specialist and you are on the way to being debt free in less time and for less money than if you did it on your own.
Chances are, if you are reading this article, you've got some serious debt accumulating. It's usually extremely daunting when the bills keep piling up, and you may not know where to turn to for help. Maybe you've heard a bit about debt consolidation but aren't too sure on how it may help you climb your way out from the hole you're in.
Read below to learn about different ways you can employ debt consolidation in Hawaii.
One of the more common types of debt consolidation is a consolidation loan, which enables you to merge all your debts under one single payment. You will find a couple of various kinds of debt consolidation loans you can use.
Typically a secured debt consolidation loan will help you lump most of your debt payments under a single bill at a lower rate than the individual rates you may have been getting. However, in order to secure a lower rate with a secured debt consolidation loan, you must have some type of asset to use as collateral, such as your home. More information on that can be found below.
How much of a loan you can get depends on the type of collateral you're using and how much it's worth. These types of loans can also be repaid back over a long length of time, anywhere from 5 to 30 years, and they can often improve your credit score if managed properly. Otherwise, you risk defaulting on the loan and losing the asset used as collateral.
Much like a secured debt consolidation loan, an unsecured debt consolidation loan allows you to combine your debt payments under one lump sum with one interest rate. However, unlike a secured debt consolidation loan, you will not need an asset or collateral to receive such a loan.
Because you're not offering up any collateral for such a loan, it's a much riskier loan for debt consolidators, and your interest rate could be somewhat high. These loans are determined based on your credit history and score, and the upside to an unsecured debt consolidation loan is that you're not in jeopardy of losing your asset should you default.
A home equity loan permits you to borrow money, using your home as collateral. This home equity loan is essentially a second mortgage that allows you to turn the equity on your home (the money your home is worth minus the amount you owe on it) into cash to be used at your discretion, such as debt consolidation. These loans are set up to be repaid quicker than your mortgage in equal payments with a fixed interest rate.
Home equity loans are secured loans that come with the same risks and rewards mentioned above.
There are also programs which permit you to consolidate all of your credit card debt into one single payment (and interest rate). If you've got good credit, you might be able to negotiate a lower interest rate on your credit cards, making it easier to pay off.
Another option is to get a new credit card at a low introductory interest rate (possibly as low as 0%) and transfer your credit card balance to your new card. While you're in your interest free rate, you can make double payments so as to pay off your debt faster. But remember that the interest will probably be fairly high after the introductory period. You should consider this way of consolidating debt only if you know you can pay off the debt while the introductory rate is in effect.
Another option when considering debt consolidation is to enroll in a debt management program. A credit counseling agency will help you set up a debt management plan so that you can pay off your debt in a timely fashion. This agency will also usually negotiate with your debtors so that they can reduce interest rates and fees.
Once the repayments are negotiated you will usually establish an account with the credit counseling agency and pay one lump sum a month into the account. The credit counseling agency will then disburse the payments out to each creditor. This benefits you because you just need to make one payment, and additionally it gives creditors more assurance that your payments will be made on time each month.
Credit counseling agencies can also help you create a budget that's straightforward to follow and help alleviate some of the stress your debt has been causing you. Providing you stick to the plan a debt management program can help you save money, pay back debt sooner and have a positive impact on your credit score.
Debt consolidation needn't be scary, and there are many options that can help you get out of debt faster. Research all of your options and then choose the one that works for you and your financial situation.