Chief ways in which you can consolidate your debts

When you are suffering from rising debts and are getting buried under a pile of debts then you must take some actions in order to eliminate your debts and bring your financial life back on track. If the problem that you are facing has got to do with the multiple number of debts that you have, then you can consider a debt solution called debt consolidation. Under this process all your multiple debts are combined in order to form a single outstanding debt that you need to pay towards. The rate of interest that you are charged by your creditors also greatly reduces and you have to pay a much lower amount towards your debts.

There are many ways in which you can consolidate your debts. However, some of the most common and popular ways in which you can consolidate your debts are as follows.

1. By taking help of a debt consolidation company

You can consolidate your debts by seeking help from a debt consolidation company. When you first approach a debt consolidation company, then they assess your finances. They try to negotiate with your creditors lower rates of interest and then they also try to get your late fees and other such charges waived off. When this is done the amount that you are to pay towards your debts greatly reduces. The financial assessment that the company does, is to determine how much you will be able to afford to pay towards your debts every month.

After this amount is decided upon you are to pay this amount to the debt consolidation company every month. The company distributes this amount among your creditors after it has kept a certain sum as fees. When you enroll in a debt consolidation company then your creditors are notified that any queries or questions that they have should be directly addressed to the debt consolidation company. Thus, you get liberated from the botheration of tackling multiple creditor calls. You also do not have to pay many creditors and the amount that you pay is also lower than what you originally had to pay.

2. By taking out a debt consolidation loan

This loan is just like a personal loan only the difference is that it is taken out to pay off all your bills. You can take out this loan and pay off all your creditors. After that you will have only one creditor, that is the lender or the bank that has provided you the consolidation loan. Thus, you are now to pay only towards the consolidation loan which makes repayment a lot easier. Another very important advantage of taking out a debt consolidation loan is that you get this loan at a very low rate of interest, much lower than when your creditors charge you. Thus, if you take out this loan and pay off your debts you will be left with paying only a single very low interest loan. This not only reduces the total amount that you are paying towards your debts but also reduces the stress that comes with handling multiple bills.

3. By consolidating debts yourself

You can even consolidate your debts all by your self. This is a great way if you do not want to waste your money on paying fees to a debt consolidation company. You can negotiate directly with your creditors. Tell them your financial situation and that you are not being able to cope up with the payments. Ask your creditors politely to reduce your interest rates and waive off your late charges. You can pay for your debts by drawing from your retirement funds or using your savings.

These are a few ways in which you can consolidate your bills. It is important for you to understand that all ways are good and effective but you are to decide which way you are to opt for on the basis of your situation and your wants.

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