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If you’re a candidate
If you’re seriously in debt and having trouble making even your minimum monthly payments, you should be checking into credit consolidation or what’s often called debt consolidation.
Refinance your mortgage
One very popular way to do debt consolidation is to refinance your mortgage and use the money to pay off your debts. However, you must have been paying on that mortgage for more than 10 years, assuming it’s a 30-year note. This is because during those initial 10 years, you’re paying only interest on the loan and not on its principal. Once you get past those first 10 years, you’re then paying down your principal and may have enough equity to do a refi and pay off your credit card debts.
Borrow against your life insurance policy
If you have a whole life insurance policy it will have some cash value. If you have enough cash value, you can borrow against it and use the money to pay off your debts. You could then either pay the money back or not as with most whole life insurance policies, you’re not required to pay back any money you borrow against its cash value. Of course, should you die, the loan’s outstanding balance will be subtracted you’re your policy’s proceeds, which could come as a rude shock to your surviving spouse or partner.
Borrow from you 401(k)
This can be a very good option because, in effect, you’re borrowing from yourself. You don’t have to apply for the loan and there’s no credit check. But this is not something that you should do unless you are absolutely sure you can and will pay back the money. One reason for this is because if you don’t pay back everything you borrowed within five years and if you’re less than 59 ½ years old when you borrowed the money, you’ll have to pay a 10% penalty on the unpaid balance. Plus, the IRS will treat whatever money you didn’t repay as an early withdrawal from your 401(k) and you will be taxed on it as earned income.
Get a loan
If you don't have enough equity in your house to do a refinance and use the money for credit consolidation, you might be able to get a debt consolidation loan. This can be either secured or unsecured. A secured loan is where you must pledge some asset as collateral. Unsecured loans are basically signature loans in that if you qualify, all you have to do is sign for it.
Use debt settlement
More and more families are turning to companies such as National Debt Relief for debt settlement as an alternative to debt consolidation. Our debt counselors negotiate with credit card companies and other lenders to get our clients’ balances and interest rates reduced so they can get debt free in 24 to 48 months. Debt settlement can be a great option for debt consolidation because it doesn't require that you borrow money in order to pay off debt. The old axiom, you can't borrow your way out of debt, is true. With debt settlement you not only can get your debts reduced – probably by thousands of dollars – but you'll also get them totally paid off.
Want to know more?
If you would like to know more about debt settlement and how it might help you with credit consolidation, call our toll-free number or fill in the form you will find on this page for a free debt analysis and estimate. We promise you won’t be sorry.