How To Consolidate Personal Debt?How to Consolidate Personal Debt Personal debt can include any of the following debt sources: credit card accounts, department store cards, revolving accounts (such as payments for furniture, a treadmill, or a recreational vehicle), car loans, or signature loans. Debt which typically does not qualify as personal debt included student loans, loans against retirement accounts, and home loans.
As you can see above, it would be easy for one person to have multiple accounts that qualify as personal debt. Remembering information about each of these accounts can be overwhelming – due date, payment amount, interest rate, payoff date, and so forth. You may also be struggling with being able to make the payments on each of these accounts and may feel strapped each month when you have to sit down to a stack of bills to take care of. One option to overcome the hassles of multiple personal debt accounts is to consider consolidation. Personal debt consolidation involves “merging” all of your accounts in to one account – with one monthly payment, often with a lower interest rate and/or lower monthly payment, and with a clear timeline for getting out of debt. Depending on your circumstances, you will develop a budget that will get you totally out of debt within in 12 to 60 months. Methods of Consolidating Personal Debt Consolidating personal debt does not have to be difficult. There are a few methods available to you. Here, we will discuss the pros and cons of each method. One method is to use a home equity loan. Unfortunately, this option is only available to homeowners with significant equity in the property. Also, you must remember that if you choose this option you are risking your home until the equity loan is completely paid off. A second, and often more financially sound, method is to use the services of a consumer credit counseling agency. These agencies will negotiate with your creditors to obtain a lower interest rate and possibly a waiver of fees, set you up on a single monthly payment, and be your advocate and advisor through the process of getting out of debt.
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