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When it comes to paying bills, everyone could use a little help. On average, people spend nearly $600 annually on late fees, and payment history is the most important factor for a credit rating. One way to manage bills more effectively is by consolidating them. If you combine all your bills into one payment, you’ll only have a single bill to contend with. Bill consolidation can make it easier to manage and organize your bills and keep your finances in order. Take a close look at bill consolidation so you know which bills to consolidate and some of the best ways to do it.
Consolidation Loans and Combined Balances
Two approaches exist when it comes to consolidating bills. First, consumers who have a great deal of debts on different accounts can take out some sort of debt consolidation loan to leave them with a single debt balance to manage. Alternatively, companies are often willing to lump a series of overdue bills into a single balance that the account holder can then pay down. Several different circumstances exist when bill consolidation might be a good idea.
Consolidating Credit Card and Other Debt
Among the most popular bills to consolidate are credit and store card bills. People frequently obtain debt consolidation loans and combine all credit card bills into one payment or a single loan. Instead of worrying about several credit card bills due at different times of the month, you’ll just have a single payment that’s often lower than the combination of all your previously outstanding credit card bills. Besides loans, many people combine their outstanding debts by executing a credit card balance transfer to a new card. While you may be subject to variable interest rates and have a longer payoff period, consolidating bills such as credit cards is a popular option for getting debt under control.
Overdue Bill Consolidation
If you’ve fallen behind in paying the balances of non-debt-related bills, such as your utilities or internet service, you may have the option to consolidate those bills for repayment. Since most utility and other companies are limited in how they can recover funds owed them, they’re often willing to adjust how these bills are repaid. Sometimes, utilities and other companies will consolidate your outstanding past due balances and allow you to make a single payment each month to pay it off. Depending upon your financial situation, they may even reduce the overall balance you owe in the hopes of recouping at least some of the money. A nonprofit credit counselor may be able to help you set up an arrangement like this to consolidate utilities and other bills.
Unenforced Court Judgment Consolidation
You could receive a series of court judgments against you for large sums of money that you’ll be required to pay. Divorces can have different types of judgments requiring payment to a former spouse. A court could also render multiple financial judgments against you in a civil matter that you’re required to repay. If there isn’t a court-ordered repayment directive, such as wage garnishment, you may be able to combine all the judgment amounts and have just a single payment each month. This will make managing your repayment of the judgments much easier. You may just need the permission of the other parties in the legal matter to do this; however, changing how you repay the judgments may require action by the court, so ensure you check with your lawyer on anything related to a court judgment.
Bills You Cannot Consolidate
While combining all bills into one payment can be a useful tool for dealing with out-of-control bills and payments, it won’t work in every situation. For example, if you don’t have enough credit to obtain financing, you won’t be able to use debt consolidation. Additionally, utilities and creditors aren’t always willing to allow you to consolidate past bills and overdue payments. Finally, several different types of bills, debts, and payments cannot be consolidated. For example, in most cases, you aren’t allowed to consolidate overdue rent. You also cannot consolidate several other types of common debt, such as mortgages or car loans. Therefore, if any of these types of payments are straining your finances, you’ll have to find other ways to address them.
Combining Bills to Save Money
If you combine all your bills into one payment, it can help you streamline your finances and get them under control. Bill consolidation isn’t always an option though; there may be better ways to deal with all your expenses. Talk to a trusted financial advisor to find out the best way to manage your monthly bills. Your financial future will thank you for it.