Friday, December 25, 2009

Debt management - how to consolidate and eliminate debt on credit cards

Some years ago, getting out of credit card debt could mean one of two things - you either have to pay off all your outstanding balances or you file for bankruptcy. Paying off balances of one or two credit cards is manageable; it can be done by almost anyone. Paying off the balances on several credit cards, however, is almost impossible, especially if you live on a fixed income. You can get lucky and find yourself receiving a substantial amount of windfall, but let us be realistic, getting a significant amount in bonuses is virtually impossible, now more than ever.

So, if you are stuck in a situation wherein all your income is basically going out to pay off several credit cards yet still not making a dent in your total balance, what can you do to start paying off all the this debt? A good option you can look at is debt consolidation. What is it and how does it work? Debt consolidation is a type of debt relief program that is most practical for individuals paying off a considerable amount of debt accrued from several sources, for example: several credit cards. It works by having a debtor take out a significantly larger loan and using the proceeds from that loan in paying off the smaller accounts. This type of debt relief program can provide very good benefits; however, it also comes with some disadvantages.

If you intend to consolidate your debt, you will need to find a good consolidation program. There are many options to choose from. You can start looking for a good program from the following sources:
• Consult your local credit union or talk to representatives of the bank you already have an established relationship with. Other credible and reputable banking establishments also offer loans, and may give you good deals in order to get you as a client.
• Lending institutions may send out mass emails to market their service. If you have received an email from lenders, chances are you fit their desired customer profile. Look into these offers but make sure that the lender runs a credible business.
• The internet. Go online and do a quick search on debt consolidation and consolidation service providers. As with anything concerning information you find online, be careful! There are a lot of programs that sound enticing but turn out to be scams in the end.

Once you have a good Consolidation Program, contact the bank and make the creation of credit. After the loan is approved, payment of all credit cards and then follow the payment plan for new loans. Remember, you should not use the new paid their credit cards to avoid debt even more.

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