RSS FeedBad credit debt consolidation - how to go about it?
This entry was written by Michelle Taylor and submitted to our guest post section. The author’s views below are entirely his or her own and may not reflect the views of manageME7.com
Falling into debt is not uncommon we all know that but using credit cards ruthlessly and then falling into debt is unpardonable and undesirable. It is very natural to become a spendthrift sometimes and we all suffer from what is known as “holiday hangover” from time to time. However, it is important to keep in mind the consequences of the same so that we don’t have to turn to options like bad credit debt consolidation.
Although debt consolidation has helped many to get out of debt but you should keep in mind that your credit score is an important indicator of your financial health that either qualifies or disqualifies you from enjoying different financial benefits offered by your insurance carrier, employer, lender etc.
Use the equity in your home
If you have bad credit, you can repair your finances in different ways and your credit score gets repaired too. You can opt for cash-out refinancing in case you have a home and it has some equity left in it. You can use the proceeds for paying off your debts at one go. It also saves you from making payments as per high interest rates.
Get a bad credit debt consolidation loan
You can also take out a bad credit debt consolidation loan if you want to pay off your debts. You have 2 options when you opt for a debt consolidation loan. You can either take out a secured consolidation loan or an unsecured debt consolidation loan. A secured consolidation loan is easier to avail since you are using collateral. The interest rate attracted by the secured consolidation loans is less. However, lenders have exercised extreme caution in extending credit to consumers. This has happened especially after recession set in.
If you are planning to take out an unsecured debt consolidation loan, chances are that you will be denied one because of your bad credit. And even if you are successful in getting one, the rate of interest will be very high.
If all other debt options fail to make you debt free, bankruptcy is the only option you are left with. So, you can also file bankruptcy if other debt solutions refused to work for you. You can either file Chapter 7 bankruptcy or Chapter 13 depending on the nature of your debts and your capacity to repay your debts.