Debt consolidating finance people poor credit
A debt consolidation loan is a personal loan that you can use pay off existing debts and then pay back, in turn, over a 2-7 year period.Borrowing money is personal, so the exact rates and terms available to you depend greatly on your financial history.Before you agree to anything, see learn the range of strategies for making debt more manageable. Bank loans tend to have more favorable terms (lower interest rates) than credit cards and some other consolidation options, but may not be available to borrowers with bad credit. Credit card issuers famously push low and 0% balance transfer offers in an effort to acquire more of a borrower’s debt.A borrower can consolidate debt in a number of ways. For cardholders who qualify, the offers can be a great way to save money in the short term.Your credit utilization ratio may go up (resulting in a dip in your credit score), but new debt could have even more devastating financial consequences.Leave the accounts open only if you are confident in your ability to keep the balances at zero.Settled debt (when a creditor agrees to accept less than the amount owed) is not the same as consolidated debt.Settled debt can be reported to the IRS, resulting in a tax liability on the amount forgiven.
Even if your new loan doesn’t require it, think about whether you should close your paid-off credit accounts after consolidating the balances.Learn more about finding a credit counselor – and click here and here for consumer advice on from the U. No matter what route you choose, read the fine print.Understand the interest rate, payment amount and repayment period on the consolidation loan, as well as any fees or penalties that could arise.One disadvantage is that many home equity loans have repayment periods of 10, 15, 20 or 30 years and can drastically increase the amount of time it takes to repay the debts.And, of course, if you don't make the payments, you are risking your home. Borrowers who want to knock down their debt in three to five years and learn new financial management skills in the process are great candidates for a debt management plan (DMP).