One of the first things most people do when they find that they are deep in debt is to get a debt consolidation loan. It is the ideal way to take much of the pressure off and reduce the flood of cash going to pay bills. Debt consolidation combines multiple debts into one loan so that you’re only making one payment each month rather than many.
Still, while this strategy is the perfect solution for many, it is not the best decision for everyone. So, when you find that your application for debt consolidation has been rejected, rather than getting discouraged, realize that it might just be a blessing in disguise. There are other options that can help you to become debt free without it.
It’s Time To Get Serious
While debt consolidation is an easy way to get your bills paid, you may not actually need it. There is no question that being over your head in debt can be stressful, but many people are discovering that they can get out from under if they just buckle down, create a plan, and stick to it. Start by making a budget. Total all of your expenses and subtract them from your net income. Then allocate a certain amount of money to dedicate to each bill. Once you’ve made your plan, stick to it and don’t let anything or anyone distract you.
Get A Co-Signer
If the do-it-yourself approach is not going to work, you can ask a close friend or family member to co-sign for you. Usually, this works well because the bank will issue you the loan on the strength of your co-signer’s credit. While this may seem like the easiest solution, take it very seriously. If you feel that you will not be able to keep up with the new payments, it could mean that your co-signer will have to pick up the slack, which could eventually damage your relationship.
Roll It Into Your Mortgage
If you are a homeowner, then consider refinancing your home and add the debt to your mortgage payments. This strategy taps into the equity in your home and uses it as security for the loan. In essence, you are putting your home up as collateral, so if you fail to pay, you could be putting your home at risk. So, keep that in mind before you make this type of decision.
Transfer The Debt To A Credit Card
You could get a balance transfer credit card to help you. These cards allow you to transfer credit card debt from several cards and roll it over into one single card. These work well because many of them offer 0% interest for a set period of time and won’t compound the interest, so it is much easier to pay down the balance. This method will work if you are committed to paying down the balance before the set period of time is up. 100% of the money you pay will go to pay down your principal.
Talk With A Credit Counselor
When all else fails, it may be time to openly discuss your situation with a credit counselor. They may know of options that you are not aware of. Credit counselors can help you to deal with the underlying issues that may have caused you to get into debt in the first place. Once you identify the root cause of your debt: overspending, impulse buying, unemployment, or even shopping addictions, they will help you to address the issue and find ways to navigate your current situation.
Being denied a debt consolidation loan does not have to be the end-all of an unpleasant financial situation. It’s just a matter of looking at your situation to find alternatives that can help you to get out from under your financial burden and give you the kind of relief you seek.
