Debt Consolidation

Category: Finance, Credit.

Your debts can be secured or unsecured.

If you stop making payments, lenders can repossess your car or foreclose on your house. Secured debts usually are tied to an asset, like your car for a car loan, or your house for a mortgage. Unsecured debts are not tied to any asset, and include most credit card debt, bills for medical care, and debts for, signature loans other types of services. No notice is required. Most automobile financing agreements allow a creditor to repossess your car any time you re in default. If your car is repossessed, you may have to pay the balance due on the loan, as well as towing and storage costs, to get it back. If you see default approaching, you may be better off selling the car yourself and paying off the debt: You ll avoid the added costs of repossession and a negative entry on your credit report.

If you can t do this, the creditor may sell the car. If you fall behind on your mortgage, contact your lender immediately to avoid foreclosure. Some lenders may reduce or suspend your payments for a short time. Most lenders are willing to work with you if they believe you re acting in good faith and the situation is temporary. When you resume regular payments, you may have, though to pay an additional amount toward the past due total. Ask whether additional fees would be assessed for these changes, and calculate how much they total in the long term. Other lenders may agree to change the terms of the mortgage by extending the repayment period to reduce the monthly debt.

If you and your lender cannot work out a plan, contact a housing counseling agency. Call the local office of the Department of Housing and Urban Development or the housing authority in your state, or county for, city help in finding a legitimate housing counseling agency near you. Some agencies limit their counseling services to homeowners with FHA mortgages, but many offer free help to any homeowner who s having trouble making mortgage payments. Debt Consolidation. Remember that these loans require you to put up your home as collateral. You may be able to lower your cost of credit by consolidating your debt through a second mortgage or a home equity line of credit.

If you can t make the payments- or if your payments are late- you could lose your home. In addition to interest on the loans, you may have to pay" points, " with one point equal to one percent of the amount you borrow. What s more, the costs of consolidation loans can add up. Still, these loans may provide certain tax advantages that are not available with other kinds of credit. Start off by getting a free credit report, and check your, make a budget finances to see the best way for you to get out of debt. You have to look at your own financial situation to see if debt consolidation is right for you.