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People who are unable to manage their debt never anticipate being trapped in debt with no way out. The luxury of using credit cards can be very tempting and most people tend to get irresponsible with this privilege. Credit card debt is a major problem in society and in this economy more people are falling into debt, sometimes because of bad spending and in other genuine cases as a result of a family problem or emergency.
A credit card debt consolidation loan may be a solution to payoff numerous debts, but is it really a smart choice? Although consolidating has over the years helped so many people, there are also certain risks involved. Since consolidating will require you provide a loan security such as a home equity or taking out a second mortgage, this makes you stand a risk of losing your property when you fail to meet the required loan installments.
Another risk involved is that most people do not really take this as an opportunity to be debt free, they see it as now having more credit and end up spending more instead of cutting back. They are now saddled with a credit card debt consolidation loan in addition to their already existing debt.
There are some things you need to consider if you want to get out of debt. There is no bad situation that can not resolved if you have an actionable plan. The important thing here is that you need to be responsible and stop amassing more debt. Learn to spend less than you earn, cut up all credit cards and only use cash.
Make a decision to create a repayment plan and stick to it, you should start paying off smaller debts first. Taking an extra job will also help with cash and you can also consider asking a close family member or good friend for help.
Negotiating with your creditors is a also a good solution as some of them may consider working with you on developing a favorable payment arrangement. This can go a long way in reducing the fees you owe them. A cash settlement is also an option but you must have ready cash available before making this offer.
Being in debt can be demoralizing but you must see this as a temporary situation that you can handle. The first step to debt elimination is first admitting that you have a problem. It is very easy to slip back into your old spending habits once your debt becomes manageable. In order to stay out of debt for good, you need a complete lifestyle change, stope borrowing, commit to a plan and ask for help if you must.
Seeking advise from a debt counselor or agency is also a good step in the right direction, it shows that you are committed to changing. Instead of a credit card debt consolidation loan, the counselor will help you work out a debt management plan, negotiate with your creditors on lowering your payments and advise you on how to spend your money. With their skills and experience, they will help you make your monthly payment obligations on time.