What You Need to Apply Online for Debt Consolidation
An estimated 20% of Americans spend 50-100% of their monthly paycheck on debt payments, with another 56% having some form of monthly debt. If you’re one of the 76% of Americans that have monthly obligations to pay back debt, then you understand how overwhelming it can be. Thinking about how you are going to pay it all back is often complex and emotionally taxing. With interest, debt can seem like an insurmountable task that never gets smaller.
Fortunately, debt consolidation could be the solution for you. If you’re looking to apply online for debt consolidation, then there are a few things you need to know before you do.
What is Debt Consolidation?
Debt consolidation is allowing a company to take all, or some, of your unsecured debt and paying it off on your behalf or loaning you the money to do so. In return, you will pay that company one lump sum at a single interest rate in monthly installments until the entirety of your debt is paid off. By combining all of your debt payments into one, you may end up paying less per month and generally have a lower interest rate. Plus, you don’t have to track all your balances – it is all in one single account. This can be a good solution for someone looking to turn over a new leaf in their financial life.
Difference Between Secured and Unsecured Debt
Secured debt has a type of collateral tied to its payment. Common examples of these are mortgages or car payments. If you don’t pay your car payment, your creditors will repossess your car.
Unsecured debts, on the other hand, are loans that don’t have any explicit collateral tied to them, making them riskier for creditors to loan you the money for repaying them. These include medical bills and credit cards. Unsecured debt tends to come with higher interest rates and is harder to pay down.
All online applications for debt consolidation will ask you for the amount of unsecured debt you have. Be sure to add up the total amount of unsecured debt you have for an accurate estimate. Some online vendors will also ask for your monthly payment amounts in addition to the total amount of your debts.
Net Pay vs. Total Pay
When your employer tells you that you will be making $60,000 a year, initially you think that means you are bringing home 5k a month. However, you quickly realize that you are not actually bringing home that amount. Taxes are taken out, Social Security is removed, and various other responsibilities, such as FSAs and 401ks are taken out.
What you are left with is your net pay. This is what most online applications for debt consolidations are looking for. They want to know what you are actually taking home (what you can use to pay your monthly installments) and then they will compare it to how much debt you have to pay off.
You will need to understand who you owe money to, at what interest rate, and how long the loan is for if you are looking to consolidate your debt. This might seem overwhelming at first, but collecting this information upfront makes that simple, online form all the easier to fill out. Then you can reap the rewards of single debt payment that much sooner.
Get Help with Your Debt Consolidation
If you’re looking to free yourself from debt and believe that debt consolidation is for you, contact UmbrellaDEBT.
At UmbrellaDEBT, we’ll work with you to find the best path to financial freedom. While that is debt consolidation for many, we also work with financial experts that specialize in credit counseling, debt settlement, and more. No matter your financial situation, we will try to help you get off the debt treadmill today.
Ready to liberate yourself from your debts? Give us a call today to speak with a specialist.