Times When You Will Need Expert Debt Consolidation

When you have multiple debts of smaller amounts to one or many creditors a debt consolidation loan can help you to lower your monthly payments.

It will cut down the rate of your interest and you will find enough relief and easy to pay one single monthly bill instead of paying and managing several at a time.

Ideally, debt consolidation acts as a relief option to those people who are struggling with their large number of debts and are falling behind their bills every month in one or a couple of their debts. This debt allows the people to get rid of their debts faster as this carries a much lower rate of interest as compared with all the different rates of interests of different loans bringing down the monthly bill drastically down. That means when you make each payment more of it goes towards eliminating your actual balance outstanding rather than accruing interest charges.

DIY or not

Now, the question here is whether or not you need an expert to do it or you can do it alone. Ideally, there are three reasons to work with a debt consolidation expert instead of doing it yourself alone though it is possible and permissible. Sometimes a do-it-yourself debt consolidation may even seem to be the best available option to you as well but it will all depend on your financial situation whether or not you need an expert help. Whether you want to consolidate your credit card debts, student loans or tax debt, you may need an expert help instead of doing it solo if you find DIY debt consolidation a bit difficult for the following three things:

• You have an excessive amount of debt
• You have a low credit score and
• Your debt is complicated.

Ideally, taking professional help to consolidate any type of debt will enable you to rest easy knowing that you will get the right solution for your debt consolidating needs.

Effects of excessive debt

The reason you will need to take help of a pro or read expert reviews when you have excessive debt it that it will have serious effect on your finance and you will feel it a bit problematic for debt consolidation.

All these problems will come down to the basic logistics and will not make your debt consolidation move as effective as it is required to be. It will make your payments too high and unfit for your budget or it may take you too long to pay off your debt. The following illustration will help you to understand things better and more clearly.

• For example, if you have a credit card debt of $75,000 to repay and use a balance transfer, you will need to pay off your debt before the 0% APR introductory period expires.
• The tenure of this 0% APR promotions may at the most go up to 24 months even if you have a perfect credit. This means if you want to pay off the debt before the regular interest rate kicks in, you will have to pay over $3,000 every month which surely is hard to fit in your monthly budget.
• To make a debt consolidation loan work in such a case, most experts will suggest that the debt relief should be provided for five years otherwise the total interest charges will become excessive. This means in other words that this debt is not worth your money.
• If you have a 60-month term on your debt your monthly payments will come down to around $1,485 and the total interest charged will be about $14,105.42 by the time you pay off everything.

Therefore, the primary objective of the experts will be to keep the rate and the total amount of interest as low as possible in the end. That is why in such situations it is better to go through an expert credit counseling agencies or debt consolidation companies. You can rest assured to get a lower monthly payment and lower a lower interest rate than you will get when you negotiate on your own.

According to the data of different research and studies, it is seen that consumers who have enrolled in a debt management program or taken help of an expert professional paid off their debts in five years or less.

Having complicated debts

If you have complicated debts it will makes DIY debt consolidation tougher as well and you will need an expert help. These complicated debts usually involve student loan and tax debt consolidation.

These loans are not as simple and straight forward as others to do on your own. It does not involve only filling out a few government forms online or listing all your debts that you currently have to consolidate your loan. There are lots of other complicated things in it that will make things more complicated and confusing if you try to do it yourself.

If you want to consolidate federal student loan debts but have a large number of other loans from different other programs such as FFEL loans, Direct Loans, a Stafford Loan and a previous Direct Consolidation Loan, you will have to consolidate in two separate batches: Direct and FFEL.

That will leave you wondering what to do about the Stafford Loan. This is where the experts in debt consolidation will come in handy. Being a loan specialist they will know which loans will qualify for which specific programs and therefore will help you to divide your loans accordingly. This will ensure that you get the lowest monthly payments and the fastest way to get out of debt.

As for tax debt, there is the complexity of dealing with penalties and interest that are often applied to your due taxes. If you apply on your own for an Installment Agreement you will still have to pay all the penalties and interest that are assessed by the IRS. However, if you take the help of an expert they will negotiate for your penalty abatement to eventually lower the total cost of repaying you tax dues to the IRS.