Credit Card Debt Help - Your Ticket to a Debt Free Life!

If you have a ton of debt and most of it is maxed out credit cards, then you know you have dug yourself into a hole that is very difficult to get out of by yourself. Lucky for you there is plenty of credit card debt help out there that you can use. The problem is that you have to choose which company it right for you and commit to them. Here is some advice to help you out.

When you decide that you want to get credit card debt help you need to know that you have to use a trusted company. There are companies out there that will charge you way too much and that is not a good thing. You should expect to pay the company a fee and sometimes it is a percentage of the money they save you. Other times it is just a flat fee. This is fair because they are working for you and they need to make a profit, too.

The best type of credit card debt help comes in the way of consolidation. This is when they take all your different unsecured debts and roll them all into one payment. They will start by negotiating the interest rates, late fees, and balances to get you a lower payment for each of your debts. Then, they will roll their fee into your payment and handle all the disbursements so that all you have to do is make one monthly payment.

They will also set you up on a plan so that you can get out from under these debts within 3 years or less. This will all depend on how much you owe and how much you can afford to pay each month. They will be up front and give you a free consultation so that you know what you are dealing with and what they can do for you. This is usually cheaper than credit counseling and it will help you avoid bankruptcy.

Debt Consolidation - Knowing All the Options You Can Use!

When it comes to debt consolidation you should know that you have more than a handful of options. This does not mean that each option is meant for you or even a good option to consider. There are some situations that some options are better for than others. Here are three situations that are very common and the proper options for them.

The first situation is for those that have less than $10,000 in unsecured debt. These individuals have basically two options for debt consolidation. The first option is to cut back on spending a little bit and pay off their debts over a period of a couple of years. The second option is to seek a financial advisor to set up a budget and keep you on track.

The second situation is the debt consolidation options for the person with more than $10,000 in unsecured debt. This person is someone that needs some help with their debt. It is probably causing them more stress than they would like and they are sick of it. This person can use a consolidation company to help them get a monthly payment they can afford and get out of debt within 36 months or less.

The last situation is the person that has a large amount of unsecured debts. This person can use the option of a consolidation company if they do not want to file for bankruptcy. Another choice would be credit counseling, but usually the consolidation companies can do more for you than they credit counseling services. The important thing is that you get out of debt once and for all.

What is Debt Consolidation? - The Hidden Dangers

What is Debt Consolidation? It allows you to roll all of your debts into one (a consolidation loan) and you now only need to make one payment each month.

It has now become commonplace to think that a debt consolidation loan is the right step forward due to a lot of television advertising that now takes place. The TV adverts simply use a known trusted celebrity to endorse their product, such as Carol Vorderman.

The viewer thinks, "Well, if Carol Vorderman recommends the product and she is good with numbers, then this must be the best solution."

- Not necessarily

One thing you may miss when watching the television adverts is the small print, "only homeowners need apply"

What most people do not realise is that these tend to be secured loans, which means that it is secured against your home. If you fail to keep up payments with the loan then you will lose your home.

Why Do People Recommend A Debt Consolidation Loan?

The main reason given is to simplify the payments to all of your creditors with one payment per month. Also, you may find that the debt loan has a lower interest rate than for instance your credit cards. So, people recommend that you pay off all of your credit cards with a loan because you will not be paying as much interest.

Debt Consolidation Loans Lead To Deep Debt

However, even though a loan can have a lower interest rate than your credit cards, think about this, most people who use this method, will clear their credit cards, take out a secured consolidation loan and will begin paying one monthly payment. How much willpower do you think is needed to not spend any money on your now cleared credit cards? - Good luck - the willpower required for this is massive!

This type of loan (according to credit action) leads three in five people into deeper debt.

What most people do not realise as they get deeper and deeper into debt is that their homes are at risk if they do not keep up repayments on the secured loan. Typically, a person who has cleared their credit card debts and taken a consolidation loan will begin spending money again on their credit cards and rack up more and more debt, which eventually leads to the problem of not being able to keep up the payments on the loan and eventually leads to the loss of their home.

If you have credit card debts, remember that these are unsecured debts, so you cannot lose your home from not paying your credit card debts, so even though you can potentially save money by paying off your credit cards using a consolidation loan, the risk is much higher as you could potentially get deeper and deeper into debt and also lose your home.

If you have debts and you are worrying how to clear them, the first step you should take is to get some professional advice and not take a debt loan. You may be surprised at the options available to you.

If you are considering a debt consolidation loan and are having problems with serious debt we can provide impartial expert debt advice. It's always important if you begin to have debt problems to contact an expert as early as possible. An expert can put your debt worries at ease and help you find a solution to your debt problems quickly.

Debt Consolidation Companies - How You Know If They Are Good Or Not!

Are you sick of being in debt and you want out from under your debts once and for all? Do you want to hire one of the many debt consolidation companies to help you, but you are unsure which ones are good and which ones are not? There are ways to tell if a company that deals with debt is a good choice or not. Here are some tips to help you with your choice.

1. Do they have a toll free telephone number listed

When you start searching the internet for debt consolidation companies you need to make sure they have a toll free number listed somewhere on their website. You may have to fill out a short form to get to this number, but it is important that it is there. This could be an 800 number, 866 number, 877 number, or an 888 number. They are all toll free now.

2. Do they offer a free consultation

Most of the debt consolidation companies that you will find online will have you fill out some basic information about yourself along with the amount of debt you have. They want you to have $10,000 worth of unsecured debts or they probably will not work with you at all. This is because if you have less than this they probably cannot do much for you and you really should be able to handle it on your own.

3. Can they get you out of debt

The company you choose needs to be able to give you one monthly payment that fits your budget and needs to be able to set you up on a plan to get you out of debt within 3 years or less. It will also be the type of company that can protect you from bankruptcy and will charge you less than credit counseling services. This is what you need in your company and once you find them you will be on your way to a debt free life.

Student Loan Consolidation - Detailed Facts and Guidelines to Follow Before Applying

Student Loan Consolidation - Detailed Facts and Guidelines to Follow Before Applying
Student loans are undoubtedly a great financial aid for those who cannot afford to fund their education. However, these multiple loans burden students with overwhelming debts soon after they graduate from college. Writing more than one repayment check every month, in the very beginning of a career, is next to impossible. In most cases, failure to make multiple payments within the stipulated time period causes the debts to accumulate. Consequently, interest rates keep escalating and the student eventually falls into a debt trap!

If you want to avoid this situation in future, you should apply for a Student Loan Consolidation, which would allow you to merge all your current loans into a single loan with lower interest rates and a very flexible repayment plan. However, before applying for it, there are certain important facts that you should be aware of and a few guidelines you should follow:

1) Is this Option Right For You?:

You should opt for loan consolidation if and only if you are finding it difficult to make monthly repayments of your current loans in time. In case the total balance amount left on all your loans is very less and you are close to paying it off soon, do not opt for consolidation as it might not be worth it at all.

2) Interest Rates:

The interest rate for the consolidated loan is estimated by taking out the average of the interest rate of all your current loans and then rounding it up to the next 1/8th of a percent. The maximum interest rate is 8.25 percent. Also, the interest rate is fixed and does not increase with time. You can also use online mortgage calculators to calculate your interest rate.

3) Repayment Amount:

- If you wish to reduce your monthly repayment amount and save big on consolidating your loans, it is necessary to extend the repayment duration of the loan. By extending your repayment plan, you can even reduce your current monthly payments by 54%.

- Usually, the repayment period is 10 years, but it can be extended to as long as 30 years. However, this largely depends on the balance amount you are consolidating.

- Although extending the repayment term is beneficial, you will have to pay more in interest as you would take a little longer to repay the entire loan. However, the good news here is that no pre-payment penalties are charged in case you choose to pay off the loan early.

4) Eligibility:

Following criteria should be met to meet the eligibility requirements for loan consolidation:

- Should be having loans from at least two lenders
- Your current student loans have not been consolidated earlier
- The total balance loan amount on all loans to be consolidated should exceed $7,500
- You should be in your six-month grace period of your loans after your graduation or you should have started making the repayments.

5) Loan Approval Process:

The entire loan consolidation process usually takes a month. Sometimes, you might have to even wait for more than 45 days. Therefore, it is better to plan for it accordingly.

6) Types of Loans that can be Consolidated:

- Direct Subsidized and Unsubsidized Loans
- Federal Subsidized and Unsubsidized Federal Stafford Loans
- Direct PLUS Loans and Federal PLUS Loans
- Direct Consolidation Loans and Federal Consolidation Loans
- Guaranteed Student Loans
- Federal Insured Student Loans
- Federal Supplemental Loans for Students
- Auxiliary Loans to Assist Students
- Federal Perkins Loans
- National Direct Student Loans
- National Defense Student Loans
- Health Education Assistance Loans
- Health Professions Student Loans
- Loans for Disadvantaged Students
- Nursing Student Loans

7) Choosing the Lender:

- If all your current loans have been acquired from a single lender, it is better to consolidate with the same lender.

- Alternatively, you can get the student loan consolidation either through the U.S. Department of Education or through a financial service that is registered in the Federal Family Education Loan Program.

Thus, with the help of the above facts and guidelines, you can get the best deal on a student loan consolidation at the right time from the right lender. Consolidating education loans is a simple way to get relief from the overwhelming debts, and should definitely be considered to ensure a secured future.

How to Figure Out College Loan Consolidation

College loan consolidation can be tough to figure out, but don't worry. This quick guide to college loan consolidation will help you figure out whether college loan consolidation is for you and how to pick a company to start consolidating student loans today!

Instructions

1. Step 1

   College loan consolidation doesn't have to be confusing. Consolidating college loans is a great way to lower your burden of debt after college.

2. Step 2

   College loan consolidation helps you to lower the rate that you pay monthly on your college loans.

3. Step 3

   Choose a college loan consolidation company. Do your research before you decide which college loan consolidation company you want to go with. Think long and hard about the decision, because while college loan consolidation may sound good at first, there are hidden problems with college loan consolidation. While college loan consolidation may once have been a great option, recent college loan consolidation laws have made consolidating student loans a less necessary choice.

4. Step 4

   Choose a college loan consolidation company that offers borrower benefits, lower payments, and fewer monthly student loan bills. Consolidating student loans should make your life easier and your college loan bills cheaper.

education Student Loan Consolidation

education Student Loan Consolidation

Consolidation Loans combine several student or parent loans into one bigger loan from a single lender, which is then used to pay off the balances on the other loans. It is very similar to refinancing a mortgage. Consolidation loans are available for most federal loans, including FFELP (Stafford, PLUS and SLS), FISL, Perkins, Health Professional Student Loans, NSL, HEAL, Guaranteed Student Loans and Direct loans. Some lenders offer private consolidation loans for private education loans as well.

A separate page provides a comparison chart of consolidation loan discounts.

Most FFELP lenders are no longer offering consolidation loans because these loans are no longer profitable. Students can still consolidate their loans with the US Department of Education's Federal Direct Loan Consolidation program at loanconsolidation.ed.gov even if their college does not participate in the Direct Loan Program.

Interest Rates

The interest rate on a consolidation loan is the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest 1/8 of a percent and capped at 8.25%.

For example, suppose a student has just unsubsidized Stafford Loans originated on or after July 1, 2006. These loans have a fixed interest rate of 6.8%. When they are consolidated by themselves, the consolidation loan will have an interest rate of 6 and 7/8ths of a percent, or 6.875%. So the interest rate increases only slightly.

If the borrower has a mix of loans with different interest rates, the weighted average will be somewhere in between. For example, if the borrower has $5,000 of Perkins Loans (at 5.0%) and $10,000 of unsubsidized Stafford Loans (at 6.8%), the weighted average is


$5,000 * 5.0% + $10,000 * 6.8%
------------------------------ = 6.2%
$5,000 + $10,000

This weighted average, 6.2%, is then rounded up to the nearest 1/8th of a percent, yielding a consolidation loan interest rate of 6.25%.

Note that the weighted average does not fundamentally alter the underlying cost of the loan. It preserves the cost structure by including each interest rate to the extent that it applies to part of the overall loan balance. For example, the consolidation loan in the previous paragraph says that of the $15,000 consolidation loan balance, $5,000 will be at 5.0% and $10,000 at 6.8%, yielding an equivalent interest rate of 6.2%.

If you are consolidating loans with different interest rates, the weighted average interest rate will always be in between. Don't be fooled if someone tries to suggest that this will save you money by getting you a lower interest rate. The interest rate may be lower than the highest of your interest rates, but it is also higher than the lowest of your interest rates. More importantly, the amount of interest you pay over the lifetime of the loan will be about the same.

(For the mathematically inclined, there is a slight difference due to the different shapes of amortization curves at each interest rate. In the example given above on a 10 year term, $10,000 at 6.8% has a monthly payment of $115.08 and total interest paid of $3,809.66, $5,000 at 5.0% has a monthly payment of $53.03 and total interest paid of $1,364.03. If you add these, you obtain a total monthly payment of $168.11 and a total interest paid of $5,173.69. Using the weighted average, $15,000 at 6.2% has a monthly payment of $168.04 and a total interest paid of $5,165.01. So using a weighted average yields a very small reduction in the monthly payment (in this case, 7 cents) and in the total interest paid ($8.68) due to a kind of triangle law. Of course, when you consolidate the interest rate is rounded up to the nearest 1/8th of a point, so $15,000 at 6.25% has monthly payments of $168.42 and total interest of $5,210.42, yielding a slight increase. So you pay a tiny bit of a premium for consolidation, due to the rounding up of the interest rate.

The PLUS loan interest rate loophole can reduce the interest rate on 8.5% fixed rate PLUS loans by 0.25% through consolidation.

If you were deferring the interest on an unsubsidized Stafford Loan by capitalizing it, most lenders will add the capitalized interest to principal when you consolidate. (Lenders can capitalize interest at most quarterly, but most capitalize it once when the loans enter repayment or at other loan status changes.)

No Cost to Consolidate

Aside from a slight increase in the interest rate on the consolidation loan, there is no cost to consolidate your loans. There are no fees to consolidate.

Under no circumstances pay a fee in advance to get a federal education loan or consolidate your federal education loans. There are no fees to consolidate your loans. While other federal education loans, such as the Stafford and PLUS loans, may charge some fees, the fees are always deducted from the disbursement check. There is never an up front fee. If someone wants you to pay an up front fee, chances are that it is an example of an advance fee loan scam.

Who Can Consolidate

Both student and parent borrowers can consolidate their education loans. (Students and parents cannot combine their loans through consolidation, since only loans from the same borrower can be consolidated. But they can consolidate their loans separately.)

Married students are no longer able to consolidate their loans together. This provision was repealed effective July 1, 2006. When married students consolidated their loans together, each spouse became responsible for the full amount of the loan, and the loans could not be separated if the couple got divorced. To avoid such problems in the future, Congress decided to repeal this provision as part of the Higher Education Reconciliation Act of 2005.

Students can only consolidate their education loans during the grace period or after the loans enter repayment. (Loans that are in default but with satisfactory repayment arrangements may also be consolidated.) Students can no longer consolidate while they are still in school. (The early repayment status loophole and the ability of Direct Loan borrowers to consolidate during the in-school period was repealed as part of the Higher Education Reconciliation Act of 2005, effective July 1, 2006.)

Parents, however, can consolidate PLUS loans at any time.

You Can Consolidate with Any Lender

Students and parents can consolidate their loans with any lender, even if all of their loans are with a single lender. (The single holder rule was repealed on June 15, 2006, as part of the Emergency Supplemental Appropriations Act of 2006. Borrowers no longer need to exploit the single holder rule loopholes in order to consolidate with any lender.) Direct Loans can also be consolidated with any lender. This allows you to shop around for a lender that offers a lower rate or better discounts.

Most lenders require a minimum balance before they will consolidate your loans. For example, many lenders will only offer consolidation loans for borrowers with loan balances of at least $7,500. A few lenders will offer consolidation loans for balances of $5,000 or more, and the Federal Direct Consolidation Loan program has no minimum balance for consolidation loans. (Lenders may not discriminate against borrowers who seek consolidation loans on the basis of number/type of student loans, type/category of educational institution, the interest rate on the loans, or the type of repayment schedule sought by the borrower. Lenders are, however, able to discriminate on the basis of the amount of the loans being consolidated, so lenders can set a minimum balance on the loans.)

Which Loans Can be Consolidated?

Any federal education loan can be consolidated. You can even consolidate a single loan. There are, however, a few restrictions on consolidating a consolidation loan.

You can consolidate a consolidation loan only once. In order to reconsolidate an existing consolidation loan, you must add loans that were not previously consolidated to the consolidation loan. You can also consolidate two consolidation loans together. But you cannot consolidate a single consolidation loan by itself. These restrictions have been in effect since early 2006.

Note that when you reconsolidate a consolidation loan, it does not relock the rates on the consolidation loan. The consolidation loan is treated as a fixed rate loan within the weighted average interest rate formula used to calculate the interest rate on the new consolidation loan. Consolidation does not pierce the veil on previous consolidations.

The new restrictions on consolidating a consolidation loan limit your ability to use consolidation to switch lenders. Generally, you will consolidate your loans once, toward the end of the grace period or after the loans enter repayment, and then be locked into that lender for the lifetime of the loan. If you want to preserve your ability to use consolidation in the future to switch lenders, you should exclude one of your loans from the consolidation.

Repayment Plans

Consolidation loans provide access to several alternate repayment plans besides standard ten-year repayment. These include extended repayment, graduated repayment, income contingent repayment (Direct Loans only) and income sensitive repayment (FFEL only). If you do not specify the repayment terms, you will receive standard ten-year repayment.

Consolidation loans often reduce the size of the monthly payment by extending the term of the loan beyond the 10-year repayment plan that is standard with federal loans. Depending on the loan amount, the term of the loan can be extended from 12 to 30 years. The reduced monthly payment may make the loan easier to repay for some borrowers. However, by extending the term of a loan the total amount of interest paid over the lifetime of the loan is increased.

In certain circumstances (for example, when one or more of the loans was being repaid in less than 10 years because of minimum payment requirements), a consolidation loan may decrease the monthly payment without extending the overall loan term beyond 10 years. In effect, the shorter-term loan is being extended to 10 years. The total amount of interest paid will increase unless you continue to make the same monthly payment as before, in which case the total amount of interest paid will decrease.

You do not need to pick an alternate repayment plan. We recommend sticking with standard ten-year repayment, because it will save you money. The alternate repayment plans may have lower monthly payments, but this increases the term of the loan and the total interest paid over the lifetime of the loan. See our caveat about extended repayment below.

Repayment on a consolidation loan will begin within 60 days of disbursement of the loan, unless the borrower qualifies for an deferment or forbearance.

Federal education loans, including consolidation loans, do not have a prepayment penalty. So you can pay off all or part of your federal education loans without incurring a penalty. If you want to take advantage of this, be sure to include a letter with the extra payment indicating that it should be applied to reducing your principal. Otherwise, the lender may treat it as an advance payment of the next month's monthly payment.

Tools for Evaluating Consolidation Options

FinAid's Loan Consolidation Calculator can help you understand the tradeoffs of consolidating your loans. It compares the reduction in the monthly loan payment with the increase in the total interest paid over the lifetime of the loan. It also shows you the interest rate on your consolidation loan.

Despite the switch to fixed interest rates on Stafford and PLUS loans eliminating a key financial incentive to consolidate, there are still several reasons to consolidate your education loans. These include having a single monthly payment, access to alternate repayment plans, the PLUS loan interest rate loophole, and the ability to reset the 3-year clock on deferments and forbearances. But consolidation can cut short the grace period, although the grace period loophole can work around this problem. It is best to avoid consolidating Perkins loans, because you lose several valuable benefits. Beware of extending the term of your loan, as this can increase the total interest paid over the lifetime of the loan; you can stick with standard ten-year repayment.

Before consolidating, always evaluate the benefits provided by the current holder of your loans. The loan discounts offered by originating lenders tend to be superior to those offered by consolidating lenders, since consolidation loans have tighter margins. Also, if you received a fee waiver or rebate from the originating lender, you may have to repay that discount if you consolidate with another lender. It may be possible to get some of the benefits of alternate repayment plans without consolidating, such as extended/graduated repayment with a loan term of up to 25 years and a single monthly payment, if you have more than $30,000 in federal education loan debt accumulated since October 7, 1998 with the lender. (This is due to a little known provision of the Higher Education Act, in section 428(b)(9)(A)(iv), and the regulations at 34 CFR 682.209(a)(6)(ix).)

You can change the repayment schedule on your loan once per year. So consider starting off with standard ten-year repayment on your consolidation loan. You are not required to start off with extended repayment. If you find it difficult to afford the payments, you can always switch to extended repayment later.