Other Ways to Deal with Excessive Debt

by admin on April 16, 2014

money2Requirements and Criteria

Banks have more stringent criteria than finance companies and typically run a credit check. A secured loan is one solution for borrowers with a less-than-perfect credit score. Your credit score is based on types of credit used, amounts owned, and more. Excessive debt and late payments show to banks that you are a risky borrower. Banks want to make sure that applicants are able to meet their monthly payment. Your earnings and other sources of income are another factor that plays a role. List all sources of income, including additional sources such as alimony, child support, public assistance benefits, life insurance proceeds, and others. Debt consolidation offers many benefits to debt-ridden borrowers, including tax deductible interest and affordable monthly payments. It is crucial to make timely payments because late or missed payments will affect your credit score.

Debt Consolidation Loans and Balance Transfers

List your debts, including mortgages, lines of credit, and credit cards. Before applying, list your expenses such as utilities, transportation, and housing, as well as your outstanding balances. There are different options to consider, including revolving and installment credit. Try to find a lender that offers loans with no prepayment penalties so that you pay off your debts faster. The requirements vary from lender to lender but it pays to know your options. Once you’ve made a list of your debts and income sources, contact your local bank or credit union.

Balance Transfer Cards and Consolidation Loans

A secured loan is one option for borrowers, and they are usually offered a lower interest rate and a longer repayment term. A balance transfer credit card is one option for debtors with high interest cards.  Borrowers find this solution beneficial because more of their payments go toward the principal. You may want to apply for a loan with a competitive fixed interest rate. Some issuers even feature specialty cards with low balance transfer rates and additional perks. Besides getting rid of debt faster, consolidation is a way to stop penalties, late fees, and collection calls. Debt consolidation works for borrowers who are unable to meet their monthly payments.Overburdened debtors can choose from different options, including individual voluntary arrangement and consumer proposal. You may consider declaring bankruptcy only after you have exhausted all other options. The IVA is an alternative that allows borrowers to pay a portion of their debts.

 

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