Being in debt is a tough spot for anyone, especially if the payments on multiple debts are getting more than you can manage.
Debt consolidation can present a way for you to get debt relief. How does it work? What kind of debt can you consolidate? We’ll go through the basics. How Does Debt Consolidation Work?
Debt consolidation is the process of rolling some - or all - of your debts into a single monthly payment. Debt consolidation is a great way to help avoid being stuck paying endless interest payments so you can make some progress. Corporations use this device all the time to help avoid bankruptcy.
It involves borrowing money at a lower interest rate and using that to pay off your smaller debts. It can save you thousands of dollars in the long run depending on how much you owe. It also means you have one single payment to keep track of instead of multiple.
How Much Debt Is Too Much to Consolidate?
Debt consolidation is a useful tool but isn’t a fix all for severe debt problems. Generally, too much debt is less about a specific number and more about how much you can cover on your income.
A debt-to-income (DTI) ratio measures your debt vs your income. To find your DTI, divide your total monthly debt payments by your monthly income and multiply by 100 to get a percentage. You generally want to keep your DTI ratio below 36%; otherwise, lenders may reject your application.
5 Types of Debt You Should Consolidate Now
Let’s look at some debts you should consider consolidating now and getting debt relief for peace of mind.
Credit Card Debt
Many people may have multiple credit cards, which means they may have multiple payments for credit card debt. Transferring all your credit card debt into one new card with a high limit and an introductory promo interest rate can save you a lot of money on interest.
Student Loan Debt
Student loan debt is a common debt facing many people today. Student loans may not be applicable for consolidation, but if yours are, it can be beneficial for you. You may be able to negotiate an interest rate and get more flexibility with your repayment schedule.
High-Interest Personal Loan Debt
Personal loans are often used for things such as home renovations or vehicle purchases and require debt relief Belleville. These high-interest loans can be consolidated to save you money on interest.
Medical Bills
It’s an unfortunate fact of life that medical bills, even in Canada, can be a problem for people. Things such as prescriptions or vision care are not covered by the public healthcare system and can be quite expensive. Debt consolidation can make payments on medical debt much easier to manage.
Payday Loans
Payday loans are often high interest, which means you’re stuck paying a lot of money on a loan that you had to take out to cover your basic expenses. A consolidation loan can give you much-needed debt relief.
Call F. J. Zielski & Associates Inc for Debt Relief in Belleville
At F. J. Zielski & Associates Inc, we offer a way for people in Belleville who are struggling to get debt relief. Whether you have credit card debt, student loans, or personal loans, call us for a consultation and we will do our best to get you the debt relief you deserve.
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