Debt Consolidation Alternatives in Georgetown, Texas

Debt consolidation is a great choice for many people, but it doesn’t work for everyone. But don’t lose hope as there are other options. You can go for various alternatives, but most come with negative impacts. One of the negatives they have is on your credit score, assuming you have good credit where you stand today. So, what are these alternatives to debt consolidation?    

Debt settlement

When you owe credit cards, you can use two debt settlement options. First, you can hire a company to negotiate with the card company or do it yourself. Dealing with professional debt collectors can be difficult, and you need to have the money to pay the settlement. If you hire a company, they will provide an affordable program payment and handle it all on your behalf.

If you hire a company for credit counseling companies in Georgetown, Texas, have an upfront agreement with card companies to lower the interest rates, but this does not lower the balances. Debt settlement, on the other hand, typically negotiates for 50-60% of what the client owes the lender to settle the debt. Sometimes settlements are more or less than estimated and some creditors historically settle higher than others. A reputable company will be able to give you a realistic estimate using historic settlements with the specific creditors that you owe.

Make a budget

A high percentage of people in the US don’t have a budget. That’s why some people cannot pay their credit card debt every month. If you ask them, they don’t know how much they have spent. What does this mean? A budget is important, so they probably need it. If you don’t want to go for debt consolidation and live in Georgetown, Texas, this can help. If you have a budget and adhere to it, you will have extra money to clear your debt.

So, what are the different ways of using that extra cash? First, there’s the debt avalanche and debt snowballs approach.

Debt avalanche: Take care of the credit card with the highest interest rate and pay as much as you can monthly. But also continue paying the minimum amount due on any other cards. After finishing the first, you continue the cycle repeatedly until you clear all debts.

Debt snowball technique: It is almost similar to avalanche, but you start with the card with the lowest interest. Pay a minimum on other cards, and the extra money uses to pay off this card. When you finish paying off, go to the next card and do the same. But for all this to work, you need a budget that you will stick to.

You can use these alternatives if you feel debt consolidation won’t work for you. But, you need to know how each option works and if it suits your situation. A debt consolidation loan is always a great option if you can obtain one with a lower rate than your credit card payments. As interest rates rise, this will lock you into a fixed rate for the term of the loan. Credit counseling, debt settlement, and bankruptcy are options to consider if you cannot obtain a debt consolidation loan or feel that you cannot use one of the self-help techniques above.