Debt consolidation helps you in handling your multiple credit card bills. If you are in California, you can either consolidate your debts on your own or take the help of California debt consolidation companies. Debt Attorney California companies will help you in combining all your unsecured debts so that you have to make a single payment each month. The counselor may also negotiate with your creditors to reduce the interest rate of your loan, and other charges on late payment or over-limit fees may also be forgiven.
What kind of debts can be consolidated?
All of your unsecured debts like the credit card bills, unsecured personal loans, private student loans, departmental store cards, medical bills, etc can be included in your consolidation program. However, you can’t include the secured debts like secured credit cards or mortgages in a debt consolidation program.
What are the types of debt consolidation?
1. Credit card balance transfer – Credit card balance transfer is when you can transfer all your credit card balances into a single low interest credit card. This single credit card should come with a high credit limit so that all other credit debts can be transferred into it. After credit card balance transfer you will have to pay towards a single card only. The monthly payment is lowered too, as the new card has a low interest rate. However, this type of debt consolidation negatively affects your credit score.
2. Debt consolidation loan – With a debt consolidation loan all your multiple credit bills will be consolidated into a single debt and that too with a lower interest rate. The monthly payment amount will also be low but the loan term of these loans are generally long. So it takes a long time to become debt free.
3. Personal loan – You can take out a personal loan to consolidate your debts. As it is an unsecured loan, so you are not required to put up anything as collateral. It has a fixed amount of monthly payments over a fixed period of time known as the loan term. However, you will have to face difficulties in getting a personal loan with a bad credit score. Even if you may get the loan, you have to pay a very high interest rate.
4. Home equity loan – You can get this type of loan using your home as collateral. As you are required to keep your property as collateral, this type of loan comes at a lower interest rate but if you fail to make payments, your home can be taken away. There are also some tax deductions on home equity loans.
How the program works?
California debt consolidation program works like any other consolidation program. These are:
1. Get enrolled in the program: First, you will have to go to a California debt consolidation company for help. They will enroll you in a consolidation program and the company agent can handle your creditors in a professional way. You will have to pay fees to the company for their services. You will have to pay a onetime representation fee to communicate with your creditors and negotiate with them, and a monthly representation fee, for rendering their monthly service in handling your monthly payments and distributing them among your creditors.
2. Analyzing your financial situation: When you enroll with a California debt consolidation company, the representative of the company will help you analyze your financial situation on the basis of your monthly income and expenses and will also help you in preparing a budget, so that you are able to save extra money. You can later use this money to pay off your debts.
3. Negotiating with your creditors: After you get yourself enrolled in the program, the representative of the company will receive calls from your creditors on your behalf, and start the negotiations with them in order to reduce the interest rate and waive off penalties for late payments and over the limit charges.
4. Start to make payment: After the negotiations are over you will have to make a single payment each month to the California debt consolidation company. They will then disburse the money among your creditors. Once your creditor receives the money, they will send you confirmation letters.
What are the benefits of a consolidation program?
Benefits of California debt consolidation program are:
* Counseling: If you opt for a consolidation program with a California debt consolidation company, they will do counseling with you to help you realize your financial goals. They will analyze your financial situation and help you pay off your debts through consolidation.
* Negotiation with creditors: The consolidation company will also negotiate with your creditors on your behalf, to lower your interest rate and waive off the penalty fees towards late payments.
* Lowered interest rate: With debt consolidation the interest rate on your debt is lowered. Thus, making it easier for you to pay off the debt.
* Single payment: In a debt consolidation program you are required to make a single payment each month. Instead of handling several creditors at the same time, you will have to make single payment to the consolidation company. Thus, it becomes much easier to pay off your debt and maintain a stress free life.
* Less time is taken to pay off debt: If you opt for a consolidation program, you may be able to get rid of your debts in 4 to 6 years. Thus, in a very short time, you will be able to gain financial freedom.
You can choose any of the above mentioned credit card debt consolidation types mentioned above according to your situation and need. But, till you fully pay off your debts, you should resist the temptation of buying things using your credit cards and that to on impulse. You also need to find an authentic California debt consolidation company, in order to avoid getting scammed. You can check whether or not the company is accredited with the Better Business Bureau (BBB) and if there are any complaints against them. You can also check the details of this company with your State’s Attorney General.