Nobody wants to get into debt… but many people can’t avoid it! Debt and bill consolidation is one way to take back control over untamed finances. Consolidation of debt and bills can help deal with the mounting debt that can occur with home ownership, education and medical bills. If you have not been able to avoid falling into debt it’s important to assess how much you actually owe before you find ways to pay it all off.

The Consolidation Process

Consolidating debt is simply the process of adding up all of your outstanding debts and determining how much you can reasonably afford to pay off each month. The simplest way to do this is to work out your disposable income and compare it to your monthly debt and bill consolidation total. You will find that the amount you have available to pay off your debt and bill consolidation total is not enough but there is no need to panic.

The next stage is to work out what percentage of your debt and bill consolidation total each of your creditors represent. It is important to do this to be able to come up with a realistic offer of reduced repayments to your creditors.

For example, if your debt and bill consolidation total is $2000 and your repayment to X Creditor is $200 then you take 200, divided by 2000 and then multiply the result by 100 to give you a percentage. In this case the result is 10%. Therefore you know that 10% of your debt and bill consolidation total is due to X Creditor.

Now you see what you can actually afford to pay X Creditor from your disposable income. Your disposable income is the amount you have coming in each month minus the essential bills such as mortgage, utilities and food. The amount that you will pay X Creditor is 10% of this disposable income.

For example, you have calculated that your disposable income is $1200. To find out what 10% of this is simply take 1200, multiply it by 10 and then divide the answer by 100. The result is $120. Therefore you would be able to afford to pay the reduced rate of $120 per month instead of the $200 that it currently requires from your debt and bill consolidation

Once you have calculated the affordable amounts to pay each of your creditors on your debt and bill consolidation list you need to contact them to put forward your proposal. If you explain to most creditors that you are performing a debt and bill consolidation but do not want to take out a debt and bill consolidation to compound the issue they are more than likely going to work with you. A debt and bill consolidation loan should always be the last resort.

If you are in debt, your number one priority should be to work through a consolidation service to achieve the best possible debt settlement. A debt settlement will allow you to pay off creditors with money you receive in one large disbursement while simultaneously salvaging your credit rating.

That sounds easy enough, but what is the process to consolidate your debt? It’s a little more complicated.

You should start by asking your creditor to eliminate or reduce interest carried forward or brought forward.

In many instances, debtors do not ask creditors for help and end up in the following trap: the creditors first raise the equated monthly emoluments–most of which comes from increased interest rates. When the debtor can’t pay off the increased interest rate, he is forced to pay a penalty.

The actual dollar amount of the penalty will be negligible, but with his already-spiraling debt, the burden of those extra few dollars needlessly added will significantly add to his mental burden.

If this is your position, you need to take control and begin to eliminate your interest and penalty immediately. Once you do this, your creditor will reciprocate by giving you the benefit of the doubt, since he is no longer at risk of losing his principal.

Your next step is to consolidate all your credit card accounts by converting them into a single payment instrument–a single bill.

After you calculate the average interest applied to more than one credit card account debt, you can apply the formula for the consolidated credit card account to repay the optimum (lowest interest rate) amount only, thus reducing the average interest rate.

To make things even better, you will be able to fix your credit history by paying off all of your creditors immediately. Once the amount you receive is distributed among your creditors, you will slowly begin to recover as each creditor cancels your debt. The participating creditors will both help you recover your credit and make your repayment easier and further their interests
by recovering a principle amount that was almost sure to end up as a write-off.

You’ve probably watched the commercial on ‘getting your credit report today.”
A credit report can be helpful for a wide variety of reasons to solidate debt and borrow money.

Currently there are three major credit reporting agencies: Experian, Equifax, and TransUnion - each has their own information about your money spending habits which comes down to your credit.

For a good credit report you need to get reports from all there credit reporting agencies. Fortunately, you can get reports from all three credit agencies for about $24. This is the start to learn more about and improve your credit rating and start down the road of debt consolidation and end up debt free.

Many financial institutions need get a credit report from all 3 agencies before they will approve of a loan. Knowing your credit record can give you a heads up on your chances of receiving all kinds of services.

Know before You Apply

For example, a home loan may be difficult to get with a bad credit score, insurance will be difficult or costly, a credit card with a low APR may need be possible, or even leasing a house or car. Knowing what’s in your credit report can be a short cut to save you time applying to services which you won’t receive.

Identity Theft

In today’s age of identity theft you’ll be able to see if someone has been defrauding you or stealing your identity. If, for example, someone has been setting up accounts under your name, not telling you or running up bills and not paying them, they’ll show up on your credit reports as a bad score or flag. This will let you take appropriate action to get them removed from your record.

Clearing Up Records Can Take Time

Getting the fraud charges removed from the credit bureaus system can be a major hassle. I’ve had a friend with multiple items on his credit report when someone was using a cellphone using his name. The company did not believe it wasn’t him and reported to all three bureaus. To verify the errors he had to produce several pieces of identity, mail, as well as his home title to show where he lived at an address different from where the bill was going. They did not believe him until he showed lots of proof to all the agencies.

There are many ways to improve your credit score. First start by paying your bills on time, pay those credit cards regularly and pay on time to show you are reliable and can trusted with credit. Regularly pay off the credit card balance, pay the gas, phone, electric, and utility bills - on time.

In the long run, keeping your credit good will help you qualify for better interest rates, bigger lines of credit, and all kinds of other financial benefits that you wouldn’t have otherwise. Really, it’s easy and you’ve got nothing to lose. The word “EARLY” will solve many problems in life and paying bills early will pay big dividends.