5 Debt Consolidation Strategies You Can Do Yourself

Debt has been responsible for ruining so many lives. If you want to live a happy and satisfied life, then make sure debt is not a part of it. Debt relief can give you ultimate happiness, this is the reason you may want to do an extensive research to find out an apt program giving you freedom from debt.

Luckily, there are so many options to get rid of debt. One of them is restructuring your payments, so it is much easier to commit to. At times, people are in a position to pay off their dues, but having multiple accounts make it difficult to keep up with the things. This is where debt consolidation is the best option for debt relief.

There are varied ways in which you can consolidate your debt on your own without taking the help of a professional debt consolidation company.

Debt Consolidation Loan

With the help of debt consolidation loans, you can easily combine all your debts. Debt consolidation loans can be offered by the non-profit debt consolidation companies or via some of the leading banks. Make sure you extra cautious while using a debt consolidation company to consolidate your debt. Usually, these loans are accompanied by extra fees and this makes the cost of the loan quite high. You should also avoid borrowing money from such companies. Instead, you can go for a low-interest rate loan from your bank or credit union having better terms. This way you will also have the assurance you are not being scammed.

Balance Transfer

Another way of consolidating your debt on your own is ‘balance transfer’. For this, you need to apply for a new credit card with a 0% interest for transferring the balances. This is one of the common ways of promotion by most of the credit card companies to draw the attention of the customers, so they desert their existing accounts and use theirs instead.

In order to use these balance transfer cards, you need to pay a 3% fee and this fee will depend on the amount you will be transferring to your new card.

Once you are done transferring your card balance to your new card, you will have no interest for the following 6-18 months – depending on your new card’s promo. If you make any payment during this duration, it will add on to your main balance, hence assisting you to pay your debts faster.

Borrow A Life Insurance Policy

It is one of the most anticipated ways of consolidating the debt, but if you have to make a decision from bankruptcy or life insurance loan, then you should borrow from your insurance. Usually, you can borrow up to your loan’s cash value and further use the proceeds for debt consolidation.

Your insurance company won’t bother you to make payments if the loan is below the cash value of the policy, but make sure you have made the payment anyway. In case you are not able to repay the loan, you can use the death benefit in order to cover what you have borrowed and there are chances that your survivors may not get anything.

Debt Settlement

You can also use the option of debt settlement. The best thing about this option is that you can easily do with or without the assistance of debt professional. If you are looking to do your own debt settlement, make sure you have successfully convinced your creditors that you are in a serious financial crunch.

You will have to default on your payments deliberately just to show that you are not in a position to pay the dues. Remember, you need to have a considerable amount of money to offer your creditors – it can be an amount that is lower than your balance. In case you don’t have this then make sure you save up for it. You need this amount so that you can negotiate with your creditors. You will tell your creditors you can make the payment for a set amount but only if the debt is forgiven.

Home Equity Line Of Credit Or Home Equity Loan

You have the provision of borrowing against the equity in your home with the help of a home equity loan or home equity line of credit and using the loan to settle your credit card debt. A home equity loan can be defined as a closed-ended account and you have to repay over a set period of time. As far as home equity line of credit is concerned, it is an open-ended account pretty much like a credit card that you can borrow against and repay.

As compared to other loans available in the market, home equity loans and credit have impressive interest rates along with high borrowing limits as well. But, there is a drawback as you are securing your credit card debt with the equity in your home. In case you fall behind on your payments, unfortunately, you will have to face foreclosure and it is worse than defaulting on your credit card payments.

Author Bio

Sophia Jones tries to live her life like the sun – setting her sights high and vowing to always rise up again. Always game for an adventure, Sophia loves widening readers and her own expectations of our vast, beautiful world. As a journalist, Sophia writes to inform. As a creative writer, Sophia strives to inspire. Overall, she hopes to captivate. She currently writes for paisa.co on credit cards, banking, insurance and investing etc.