If you are having debt problems you will need to deal with them or run the risk of finding yourself insolvent. The first thing you need to do is determine how serious your financial problems are by listing all of your current obligations. When documenting these financial obligations, you should note what is interest rate being charged, minimum amount due, and total balance outstanding. Do this for each and every debt you have. Now that you have the debts itemized you may be a candidate for a debt consolidation but there are a few things you need to explore first.
Understanding Income Vs Debt
When you have all of your debts listed, you will need to document all of your sources of income. Deduct all of your monthly expenses from your income, if your result is less than zero then you will need to move ahead with a debt consolidation or run the risk of falling into bankruptcy. The reasoning for this is based on the reality that if you are not able to meet your basic obligations, what would happen if you were unable to work for a week or two! If you are not able to scale back your debts or increase your income you are going to end up in serious financial hardship, it is merely a matter of time.
Benefits of Consolidating Your Debts
If you look back at your total debts, you would notice that the interest rates and payment dates vary. When you consolidate your debts, you will be able to dramatically reduce the interest rates you are paying which should help put more money in your pocket. Along with reducing the total amount of interest you have to pay, another benefit is having the total balance slashed.
When you hire a firm to help you consolidate your debts, they will contact each of your creditors to renegotiate your credit agreement. These firms will usually get your interest rates lowered and the total amount of your debt reduced. Most creditors are willing to renegotiate new terms, especially if you have a professional debt consolidating service provider working with you. Once the negotiations have been completed, you will have a new payment date where you make one payment a month and all of your debts are repaid. There are a few ways to handle this and the firm helping you consolidate your debts will address those items with you.
Something that you will need to do is begin sourcing for a firm to help you consolidate your debts as soon as possible. With each passing day, the amount of interest you owe increases making it even more difficult to get out of debt. While the interest rate rises, you could be incurring late payment fees so it would be in your best interest to take proactive steps and get these debts consolidated ASAP so you can begin enjoying life instead of living under crippling debt.