How to Consolidate Your Debt by Yourself

By: John Thackeray
With a lot of careful planning and thought, you can consolidate all your debts on your own. You could calculate how much you owe in total and then apply for a bank loan to pay off your debts.

Once you have the bank loan, which should ideally be at a lower interest rate than your other loans, you can begin your plans. It is important to ensure that your bank loan's interest rate is lower than the interest rates of your original debts, as you will land up owing more in the long run.

It is a good idea to try and phone your creditors and negotiate. Some creditors will lower their fees and charges if they know you are going to be paying them in full in the end. Remember that if you get a settlement – say, your debt is at 5K and the company accepts 3K, the $2000 will count as income for your next income tax return. Even if some creditors are not entirely co-operative, you may be able to at least get some fees reduced, or perhaps even some late charges removed.

Once you have contacted all of your creditors, you can then send out all of the necessary payments. Be sure you have called all the creditors, and there is no confusion on the amount you are expected to pay. You do not want to receive a bill at the end of the month with any interest added on an amount still outstanding. The debt consolidation process can be confusing, but just needs time and patience. The best move is to take your bills out one at a time and work through them completely to prevent any errors. Ensure that you keep careful records of what you have paid and when, as well as the proofs of payment. Keep the cancelled cheques attached to your copy of the credit card statement, so as to prove you should have a zero balance in the event of any conflicts.

Once you have paid the creditors off, resist the urge to spend on the credit cards again. You are still in the same amount of debt, only owing to a different creditor. Be sure to make your payments to this loan on time and in full, especially if you attained a home equity line of credit or a second mortgage on your home – you do not want to lose your house. In the event that your income does not meet the requirements of your bills, rather try to decrease your monthly bills or increase your income as opposed to running up debt again. This will put you in the same position as before, only this time with credit cards and a second mortgage or line of credit. This is why it is important to take the time to make a solid plan for your debt consolidation, to ensure that you do not land up in the same predicament again.

This advice on consolidating your debt by yourself will help you, but if you feel you require further assistance then visit www.financeation.com.