How do you apply for debt consolidation? And How do you know whats the best one??

Question

I have a debt for about $2,500. Now to some people that may not be much but for me ..its a lot. Iam 20 yrs old and i messed up my credit bad the minute i turned 18 so now that iam a lil older and smarter and stressed out ..i want to make it better and start fresh..What should i do???

Answer 1

If you want to ruin the next 7.5 years of your life, go for it. Debt consolidation is considered to be worse than filing for bankruptcy. I'm sorry, but $2500 is NOT a lot of money and if you make some effort you should easily be able to pay it back in a few months.

Stop trying to figure the easy way out and just deal with it. Get a job or 3 and you can be out of debt in 6 months. It may mean you have to cut back on free stuff but you can do it and there is no excuse no to.

You will get a better start by just paying the debt. Call your creditors and ask if they have a rehabilitation plan that you can enroll in. This will allow you to make payments and once you're done they will remove the bad stuff from your report. This would be a much better bet.

For extra money, check the gigs section on Craigslist. There are people who are always willing to hire people to help them move for a few hours or to mow their lawn or something like that. Get creative.

You can do this.

Good luck!

http://www.personalfinance101.org/?utm_source=YH&utm_medium=link

Answer 2

There are much better things to do then simply consolidation. The best way is simply by doing something called a debt snowball. Here is how it works.
1. List all debts in order from smallest balance to largest balance.
2. List all minimum payments next to them.
3. Continue to pay the minimum payment on all debts but the top one. Take a second job and/or any extra money you can afford and knock out this debt.
4. Take the payment you were paying on the lowest debt and apply that to the next one plus the payment you had already been paying on it.
5. Once that one is down, roll that entire payment into the next debt.

Example
Starting out
Capitol One Visa $100, $10/mo
Citibank Visa $200, $15/mo
Bank Loan $1000, $30/mo

After 1st is paid off
Capitol One Visa $0, $0/mo
Citibank Visa $175, $25/mo <-- (10+15)
Bank Loan $950, $30/mo

After 2nd is paid off
Capitol One Visa $0, $0/mo
Citibank Visa $0, $0/mo
Bank Loan $900, $55/mo <-- (25+30)

As you get closer to the bottom, the payments knock that debt off faster and faster.

Answer 3

You want to find a non-profit organization that will coordinate payments for you and negotiate a single payment for all of your debts.

You do not want a service that charges you money or promises to eliminate the debt or anything else. You want to organize a series of payments that will pay off the debt in a consistent and timely manner. This will aid in repairing your credit and keep you from becoming the victim of some low-life financing company promising the world and delivering an even higher debt load.

Answer 4

If the credit is already bad, it may be difficult to get another loan. You may just have to bite it & pay this down. This will automatically improve your credit also, so long as you pay it on time & at least the minimum. Credit counciling could be another way to go like another poster said.

Answer 5

To add on to Nate's answer.. check out Dave Ramsey at www.daveramsey.com, or check out his book The Total Money Makeover. His plan can help you get out of debt and building wealth.