Debt consolidation?

Question

Has anyone gone through debt Consolidation? If I am in debt atleast $20,000. How much do you think my monthly payments would be? How do they determine how much you will pay and can pay?

Answer 1

I owed $25,000 in credit card debt (5 cards) and I consolidated with United Financial. I had late fees on all and my average interest rate was 30%! I now pay $490 per month and all of my interest rates are between 2 and 9%! The late fees are gone and all of my cards are now current. I will be in the program for another 36 months and then I will be debt free. I am so very greatful for joining this program. Just be cautious - keep at least one card out of the program, because once you consolidate, you are unable to use the cards and monitor your monthly statements to ensure that the payments are being received on time.

Answer 2

I am currently going thru it. More than what you owe!! I have 7 credit cards that I consolidated. All of them accepted the program. I cut my payment by about 45-50%. I will be paid off in 5 years. All creditors also lowered my interest rate and I no longer receive late fees. Its great!! I used www.thefreedompoint.com They are pretty helpful. I am 4 1/2 years away from being debt free. At least with credit cards...I still have the mortgage and car payments!! Definitely consider it if you are only able to make minimum payments. If you can pay more, I would try to pay them off first yourself. Don't go bankrupt!!!!

Answer 3

It may help some, depending on who the creditors are. Some creditors will reduce your rate if you consolidate, others, like Discover will actually increase it to the max 25%.

The real downside however is that if you need to get a morgage, the consolidation will be treated buy the lender as a default, and you will be screwed on the interest rate big time...

My advice: if you can, tighten your belt and pay the debt yourself as FAST as possible. Any moment you delay paying the debt makes the lenders richer and yourself poorer. Interest adds up to a lot - in fact, credit card companies love it when people run a balance and then pay the minimum over time ...

Another option is to default. This will come to haunt you later though... so do not do it unless the situation is really dire.

Answer 4

When you go through a debt consolidation, you take out a mortgage, pay off your old one, and then use the proceeds to pay off other debts. The new mortgage payment is usually less than the combined payments of the old mortgage, and the monthly payments on the debts you paid off. If it weren't, it wouldn't make much sense to do it, right? So, finding out what your payments would be would involve looking at your credit, income, debt, and equity situations. As far as what you can pay, most lenders want you to stay below 45% of your gross monthly income.

Answer 5

At 6% over 5 years, the payment would be $386.65. If you are that much in debt, the biggest problem is probably your spending. Put an hour of work in each week to review how much you are spending and work hard to limit your future expenses. You need to make more than you spend in order to pay off debt.

The more you pay each month, the faster your debt will be paid off. The higher your interest rate, the slower you can pay it off. Look out for fees from the consolidation company. Some companies charge alot more than others.

Answer 6

All these are good answer so far. My advice is to refinance your home if you have one and include the other debt int he mortgage. The interest rate is going to be lower then any where else. They base the payments on your credit which then they qualify you for an interest rate. Do not do credit couseling they hurt your credit while you are in it and costs a lot money and take a while to pay off. Mortgage companies look at these as a Chapter 13 bankruptcy. Any other questions please feel free to contact me.

Answer 7

If you are in debt that much now and the new interest is 50% of what you are paying, you could cut your monthly bills by 40% and still pay off the money and have enough to live on.