3 things you need to do to help consolidate your debts

Heavily in debt? Before you declare bankruptcy, consider debt consolidation as a way out of your money woes. Here are threethings you could do to help get your finances back in order.
Debt consolidation involves getting a loan from a bank or financial institution to repay some or all of your other debts. The advantage of this solution is that it simplifies the management of your finances—one lender, one payment. It also usually allows you to benefit from a lower interest rate than that imposed by your other creditors. The result? With a single monthly payment and a lower interest rate, your monthly financial burden becomes much easier to bear.

3 things you need to do to help consolidate your debts

How to get a consolidation loan

The first step is very simple; just make an appointment with a person in charge of credit and loans at the financial institution of your choice. To prepare for your meeting, make sure you can answer these questions:

  • What is your current financial situation?
  • What is the total amount of your debts?
  • What is your income?
  • What is the value of your assets, including investments and property?

But that's not where it ends. There are three things you absolutely need to do to nail down this type of loan. Specifically:

1. Be candid about the details

Before accepting your application for debt consolidation, the person responsible must first assess the credit risk you represent.

  • As in court, it’s better to tell the whole truth and nothing but the truth. If you lie, your nose won’t grow, but your credit rating will speak the truth and make you appear unreliable.

2. Don’t wait until it's too late

If your credit history is tainted, it’s a safe bet that the financial institution won’t accept your application for consolidation. That is exactly why you should take action today, before things get worse.

  • If you’re in debt and struggle with high monthly interest charges, then now is the time to seek debt consolidation. Don’t wait until after a couple of skipped payments to get help!
  • Take a look at all your credit card balances. Are you able to get them down or do they stay the same? If you can’t ever seem to pay off anything other than the interest, then it’s important to correct the situation without delay.

3. Stop spending right away

From the moment a financial institution agrees to take on the risk of lending you money, it could cancel your credit cards from other creditors. If that isn’t automatically done, you need to take control of your spending yourself.

  • You don’t want to make the mistake of accumulating more debt while you pay off your consolidation loan. Cancel your own credit cards or take them out of your wallet and hide them at the bottom of a drawer.

It’s okay to ask for help

If you’re noticing that your debts are accumulating, you should consult a professional at your bank or financial institution. Together, you will find the right solution for your situation, whether it’s a debt consolidation or another option.

  • Bankruptcy trustees also offer helpful services and advice. Asking for help is the best way to deal with the burden of debt that weighs so heavily on your shoulders.
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