The average American family has 10 credit cards and over $ 15,000 in credit card debt. Nearly half of these families have difficulty making their monthly minimum payments and some use plastic to cover the costs of daily living, such as food, gas and the morning bar. Late fees and taxes that exceed the limit of increase and more and more families receive only one or more payments in total.
If you have debt problems, now is the time to stop this destructive cycle and get help from a debt reduction program. This article describes the principles of billing, one of the most popular forms of debt relief.
What is bill consolidation?
By consolidating bills, also known as interest rate arbitrage or credit card consolidation, your loans and high-rate credit cards are bundled into one low-interest loan that you can afford. In other words, take a loan to pay many more. You make a monthly payment to a debt consolidator who distributes the money to the creditors until full payment. Only unsecured debts (credit cards, medical bills and personal loans) can be consolidated. It is not possible to consolidate mortgages, rents, utilities, mobile phone bills, insurance premiums, auto loans, student loans, food, family allowances, taxes or fines.
There are two types of bill consolidation: non-profit and non-profit. Both types work with your creditors to process modified payment plans. Contrary to popular belief, nonprofit companies charge a small fee for their services. If a company is profit-oriented for bill consolidation, it is also necessary to pay a service fee of about 15% of the face value of its liability. For example, if the total amount owed to creditors is $ 15,000, you can expect to pay about $ 2,250.
If you plan to charge, you must first know the following:
- Consolidate the bill will not solve your reckless spending or your savings habits. The only way to achieve permanent financial freedom is to apply the dynamic rules of financial recovery in your daily life. These smart monetary principles help you define spending habits and savings based on solid foundations. They are discussed in a separate article entitled “The Dynamic Laws of a Comprehensive Financial Reorganization”.
- It is not possible to qualify for a change in invoice consolidation due to an insolvent credit history. In these cases, you can consider other debt cancellation options, such as: As for debt settlement, check. However, protection against bankruptcy should only be considered as a last resort.
- If the unsecured debt is less than $ 10,000, consolidating billing is probably a better option than settling claims. Here’s why: Most debt settlement companies require you to have an unsecured debt of at least $ 10,000 to qualify for their services.
- Since most loan consolidation loans are unsecured, the lender can not claim the house if it is impossible to track payments. Late payment or loss of payment, however, has a negative effect on solvency.
- If a mortgage is secured and payments are lost, the lender may request his home or other resource.
- It is not known if you have already consolidated your debt.
- Consolidated invoices should not be confused with a debt settlement, another form of debt reduction. When settling the debt, the negotiators contact the creditors on your behalf to settle their debts at a reduced and agreed amount. Once you have signed up for a debt settlement program, your trading team will open a trust account for you. You must deposit up to 50% of the principal amount of your liability on the account for a period of 24 to 60 months. This money is used to settle debts with creditors.
- As mentioned above, you can only group unsecured debts such as credit cards or personal loans. You can buy mortgages, rentals, bills, mobile and cable expenses, insurance.