Debt consolidation programs make it easier to eliminate high-interest credit card debt by reducing the interest rate and lowering monthly payments to an affordable level. The primary goal of debt consolidation programs is to help you eliminate debt and save a little money in the process. But how do i get affordable debt consolidation?
InCharge Debt Solutions
TYPE: Nonprofit Debt Consolidation.
HOW IT WORKS: A credit counselor asks questions about your income and expenses to see if you qualify for a debt management program. If you enroll in the program, you agree to have InCharge debit a monthly payment, which will then be distributed to your creditors in agreed upon amounts. In return, credit card companies agree to lower interest rates to around 8% (sometimes lower), which results in lower monthly payments.
FEES: A one-time setup fee that ranges from $50-$75. Monthly service fee is about $30.
If you enter a credit counseling program, one of the options the counselor might suggest is a debt management plan. With a debt management plan, you can qualify whatever your credit score is. Here, the counselor will negotiate with the creditors on your behalf. You might get lower interest rates, reduced penalties, or waived late fees in exchange for a stable repayment plan. This repayment plan will last from 3 to 5 years, during which you have to make a single payment to the counselor each month. The counselor will take care of distributing the payments to your creditors.
With debt settlement, your creditors might agree to lower your balance if you pay in a lump sum. This option is available to consumers with bad credit and can help you quickly get rid of your debt while saving a lot of money. Note, however, that your credit score will take a big hit with this alternative because credit reporting agencies treat the unpaid money as a demerit. Your credit score will drop by 75 to 100 points and the damage may last for years.
If you still want to proceed, you typically need a third-party company to handle the debt settlement.
I'm not sure if there's any. Getting out of debt through a debt consolidation loan is a good move but it is not available for everyone, especially those who have bad credit. You have other options to pull yourself out of debt, however, such as credit card refinancing, debt management plan, home equity loans or lines of credit, debt settlement, and, as a last resort, bankruptcy.
Annual percentage rates: The loan's APR represents its true annual cost, as it includes all fees and interest charges. Rates vary based on your credit scores, income and debt-to-income ratio. Use APRs to compare multiple loans. Choose a low rate with monthly payments that fit your budget.
Origination fees: Some lenders charge origination fees to cover the cost of processing your loan. The one-time fee typically ranges from 1% to 8% of the loan amount and is either deducted from your loan proceeds or added to the loan balance. Avoid loans that include this fee to keep costs down, unless the APR is lower than other no-fee loans.