Finance, Loan, Debt and Credit.

August 15, 2012

Prepare yourself for Debt Consolidation

When you finally decide to undertake a debt consolidation program because your debt has gone out of hands, it is not enough to make up your mind and hire a debt consolidation agency’s services. You will also have to take part of the process and it is wise to prepare yourself.

Whenever you loose control over your finances and your debt keeps accumulating, consolidating your debt is an excellent solution. However, you should know that from the moment you join a debt consolidation program, your finances and credit situation are affected and many things need to be taken into account so you are ready and prepared for what may come.

Get All The Finance You Need Prior To Consolidating

After joining a debt consolidation program you will not be able to get approved for a loan or credit card for some time. So, if you think you will need finance during the time the consolidation program is being carried out, try to get approved for a loan or credit card before joining the debt consolidation program.

If you apply for a credit card, do not use it till you join the debt consolidation program. Since the credit card balance will be null, that credit card will not be part of the debt to be consolidated and thus you will be able to use it freely for any emergency. Bear in mind though, that the idea is to control your expenses so you can recover from your financial situation and this should be discussed with your consolidation agent.

Concentrate On Repaying Non-Negotiable Debt

Debt Consolidation is more efficient when a greater proportion of negotiable debt has to be consolidated. Too much secure debt will turn debt consolidation into a bad business as secure loan lenders are usually not willing to change the loan terms because they always can claim their money by resorting to legal actions against the property guaranteeing the loan.

So, if you can not pay all of your monthly payments, focus on your secured debt. Concentrate on repaying your mortgage, home equity loans and any other secure debt you may have. If you have to choose between repaying secured and unsecured debt, always choose making your payments towards the secured loans. This way you will reduce the amount of non-negotiable debt and the debt consolidation program will turn out to be more successful.

Start Budgeting

It is always smart to think ahead. When joining a consolidation program all your finances will be analyzed and you will have to inform your debt, your assets, your income, your expenses, etc. All this information is extremely necessary as it will be used to design the best program towards reducing your debt while leaving your lifestyle unaltered as far as possible.

However, if you are really committed to reducing your debt and solving your credit problems as soon as possible, you should start budgeting before even joining the debt consolidation program. Making a budget will help you take control of your finances and see why you can not meet your monthly payments. Sometimes, you will learn that some things you did not think were so expensive, really affect your income/spending ratio leaving small space for repaying debt. Always remember that knowledge is power, and knowing how and where you spend will give you the power to control your spending.

Devora Witts is a certified loan consultant with several years of experience in the credit area who instructs people regarding credit recovery and approval for personal loans, home loans, consolidation loans, car loans, student loans, unsecured loans and many other types of loans. If you want to understand Mortgage Loans and Personal Loans thoroughly you can visit her site If the link doesn’t work, just copy and paste in your browser’s address bar.

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