Consolidating debt without bankruptcy

Many credit card companies and banks have hardship programs intended for this type of situation.Before you enter a hardship program make sure your monthly payment and interest rate actually go down.Avoid companies that charge large fees, don’t provide a fee schedule, resist getting everything in writing, or promote too-good-to-be-true offers.To find a reputable credit counseling agency, start by visiting the Justice Department website.Before signing any agreement, research the debt consolidation company, including checking for complaints with the Better Business Bureau, and avoid companies with a high interest rate or large fees. If you are unable to manage your debt, you also might consider debt settlement, a debt management plan, or filing bankruptcy.Carrie Pierson, human resources manager for the Wyoming-based nonprofit Family Financial Education Foundation (FFEF), says facilitated debt management is a good option for some people because a financial counselor is able to negotiate a lower payoff amount with the lender (although, as stated, you also can do this for yourself by calling your creditors directly).

Take action immediately when you notice you can't afford to make payments.Suddenly a manageable monthly payment turned into an unmanageable debt. Debt consolidation loans combine all unsecured debt into one loan and one monthly payment.Positive outcomes can include lowering your interest rate, protecting your credit, lowering monthly payments and getting out of debt faster. There are two types of debt consolidation loans: secured and unsecured.If you ultimately have to file bankruptcy, you can have peace of mind knowing you explored the alternatives.Once the process is complete, you can work toward rebuilding your credit score.

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