Posted by: nepalkochoro2008 September 7, 2009
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You can consolidate your debt in two different ways, one will have huge impact over your credit history one will have very minimal. I will explain both of them
1. Debt Settlement.
This option is the worst but not as worse as being bankrupt. There are companies that act as a mediator between you and the bank. They will charge you hefty fees as high as $700 - $1000. You might be thinking how can you reduce debt when you are again spending. These companies will usually talk to your banks and tell them that you can't pay the debt completely. When these happens, banks usually agree to settle for lower amount than what you owe. For example if you have $10000 in debt, they might agree to settle for $4500. You pay a lump sum of $4500 and your $10000 debt is gone forever. This will seriously hurt your credit history.
2. Debt Consolidation
There are many non profit organizations that will help you to talk to bank to lower your APRs on current credit cards. They will freeze your credit cards, that means you no longer can use it. You pay all the money to your bank and in the end your account will be closed. You are now out of debt. This is something that you can do by yourself. Stop using your credit cards by burning them. But before you do so, call each your banks and ask if they can reduce your current APR. They will usually make it lower but not as low if you were to go through debt consolidation. This will have minimal damage to your credit cards because all your old accounts will be closed. FICO score considers age of the accounts as an important factor in determining your credit score.
Hope that helps.
1. Debt Settlement.
This option is the worst but not as worse as being bankrupt. There are companies that act as a mediator between you and the bank. They will charge you hefty fees as high as $700 - $1000. You might be thinking how can you reduce debt when you are again spending. These companies will usually talk to your banks and tell them that you can't pay the debt completely. When these happens, banks usually agree to settle for lower amount than what you owe. For example if you have $10000 in debt, they might agree to settle for $4500. You pay a lump sum of $4500 and your $10000 debt is gone forever. This will seriously hurt your credit history.
2. Debt Consolidation
There are many non profit organizations that will help you to talk to bank to lower your APRs on current credit cards. They will freeze your credit cards, that means you no longer can use it. You pay all the money to your bank and in the end your account will be closed. You are now out of debt. This is something that you can do by yourself. Stop using your credit cards by burning them. But before you do so, call each your banks and ask if they can reduce your current APR. They will usually make it lower but not as low if you were to go through debt consolidation. This will have minimal damage to your credit cards because all your old accounts will be closed. FICO score considers age of the accounts as an important factor in determining your credit score.
Hope that helps.