Bad Credit Debt Consolidation Loan – You Do Have Other Options

By Michael Louis

A bad credit debt consolidation loan might not always be the answer you are looking for, particularly if you are having trouble finding a lender. You do have other alternatives that could provide you with the answers you are looking for. One thing you could do is talk to your family members and friends, asking them about helping you with financing to help you with student loan payments, past due notices, car payments, or utility bills. Of course, they may not have the means of helping you either, you might then be able to talk with your employer about a pay advance or a grant to help you get back on the right track.

On the other hand, you may be able to directly speak with your creditors if you are having trouble attaining a bad credit debt consolidation loan. You might have the ability to reconstruct or negotiate different terms of your contract or payments, which could lead to a greater ability to manage your debt. If you have any money in savings or investments, you might consider using them to bring yourself out of debt. This could be used to take care of bills that are extremely delinquent.

You may not typically want to dip into your savings, because it may be for emergencies or something you have been really wanting. However, you need to prioritize and look at the long term outcome. For instance, if you have $8,000 sitting in your savings account right now and have $7,500 in debt due to credit cards, you ideally have the money to bring yourself out of credit card debt and will have no need for a bad credit debt consolidation loan. However, once you pay this debt, you will only have five hundred dollars left in savings.

You need to avoid looking at it as only $500 though. Instead, you need to look at it like this. If you leave that $8,000 in your savings account, you may at most earn a four percent interest rate on it in six months. However, if you leave it there and do not pay your credit card bills, the credit cards may earn in excess of 20% interest in six months, which is far more money to pay than it is to earn.

In other words, if you pay off your credit card debt using savings, instead of a bad credit debt consolidation loan, while you may only be left with that five hundred dollars in your savings account, you will be free from credit card debt, not having to worry about accruing more interest fees on the balance.

Of course, in some cases, this simply does not work, especially if your employer will not extend you an advance or grant, if your family and friends do not have the means to help you out, or if you do not have a good deal of savings at hand, you may still want to consider a bad credit debt consolidation loan to help get back on the right path financially.

Michael Louis is always looking for the best ways to manage debt. Did you find these Debt Consolidation tips useful?