Are you currently suffering from debt, and not sure what to do about it? It's possible to consolidate your debts to take back control of them. Those debts with a high interest rate can be consolidated with a lender that has a much lower rate, making them more manageable to pay back. Before you jump into debt consolidation, know not to make these 3 mistakes.
Not Consulting A Professional
Consolidating your debt is a wonderful option for some people, but it isn't the only option that you have. Consolidating debts means that you are still responsible for paying back the original debts. It is best to talk to an attorney about other options, such as bankruptcy, and if it would be best to go that direction instead. They may offer you alternative options as well, such as debt settlement, which will help reduce how much you owe to your creditors.
Assuming All Your Debts Are Eligible For Consolidation
Be aware that all your debts may not be eligible for consolidation. As a general rule, debts that are not secured would be eligible to be consolidated. For instance, this would include debt that you have on a credit card, since there is no collateral securing the debt. Your mortgage is not something that can be consolidated in most situations, because the house itself is the collateral. You may need to look into alternative methods for those debts, such as refinancing your mortgage. The whole process may involve using several methods to get your debts under control.
Not Making the Same Mistakes
Part of debt consolidation is stepping back to look at your entire financial picture. You must understand how you got into debt in the first place, so that you can avoid getting into a financial situation like this again.
It helps to come up with an actual budget, with factoring the consolidated debts that you owe. Paying off those debts will be a top priority each month, and then paying off big bills such as your mortgage payment and utilities. By understanding what income you have left after paying off those major items, you can create a budget that will work for you. Having this game plan will help getting back into the situation you were in before you consolidated your debts.
For more advice on debt consolidation, work with an attorney, like Hawkins Bingham & Miller in your area. They can go over all your options as well, including bankruptcy and debt settlement.