When You Should Apply for a Debt Consolidation Loan

When you are in debt and cannot foresee being able to pay back your creditors, it is a frustrating situation. You will feel overwhelmed and hopeless, especially when your creditors begin calling to get the money they are owed. If your financial situation is not good and you feel as if you are backed into a corner, you might begin considering filing for bankruptcy. However, that is an option that should only be treated as a last resort as it can have negative effects on your credit. A much better alternative is to get a debt consolidation loan.

Find a Debt Consolidation Company to Help

A debt consolidation loan can be acquired through a variety of lenders, some of whom will offer low interest rates. However, the best way to get your loan is to find a debt consolidation company that can help you first. There are many nonprofit organizations that offer this important service to consumers who are struggling to pay off their debts. Make sure to do thorough research on a few companies prior to settling on one. The one you choose should be legitimate and reputable as well as accredited by the Better Business Bureau.

Explain Your Financial Situation

Once you have settled on the right debt consolidation company, you will be paired up with a counselor who will discuss your financial situation with you so that they can assess it. This is essentially credit counseling, which is a free service that is offered by many companies. You should have all of your financial documents pertinent to your loans on hand so that this professional can go over them. You will also be able to inquire about debt consolidation loans and on the best option that is available to you so that you can pay back your creditors.

Rely on Credit Counselors for Help in Finding Loans

Your credit counselor will contact your creditors and explain the situation. They will also create a debt management plan (DMP) that makes it easier for you to pay back what you owe in one single payment. The counselor will also negotiate with your creditors and very likely have any interest rates and additional fees that are tied to your debt reduced or even eliminated in some cases. The counselor will also provide your creditors with copies of the debt management plan so that an agreement can be reached about the amount you will be required to pay. After the negotiation has been reached and the DMP agreed upon, you will then be free to explore various lenders who can provide you with debt consolidation loans. You should rely on the help of your counselor to find the right one for you due to their experience and knowledge of the topic.

READ  How to Settle Your Debt Faster


Single Repayment

Once you have your debt settlement agreement, you will be able to pay off your debt in a single payment. It is very likely that the amount you are responsible for paying will be considerably lower than what you originally owed.


Be Sure it’s the Best Option for You

One thing to keep in mind is that debt consolidation loans are not the best option for everyone. It can be difficult to find a lender that offers low interest rates and may take some people longer to pay back their debts. Essentially, it comes down to your current financial situation when you choose this method of relieving debt.

This article was written on behalf of Cambridge Life Solutions, providing the most effective debt solutions Canada has to offer. Visit us for more information.

Leave a Reply

Your email address will not be published. Required fields are marked *