How to Consolidate Your Debts in New Hampshire

Collect the Details About Your Debts 

The question of whether debt consolidation may be a good option for you will depend largely upon the type of debts you have, your credit score, and the total amount of all the debts you owe. It is important to gather accurate information about your debts before making a decision regarding how to handle them. The best way to do this is by finding copies of all of your monthly bills and your most recent credit card statements to evaluate each current balance, minimum monthly payment, due date, annual interest rate, late payment fees, over-the-limit fees and other charges billed for each account. You should also gather details regarding any personal loans, student loans, medical bills, payday loans, auto loans, installment loans and/or collections you’re obligated to pay. Before you attend your free credit counseling session, you’ll want to request your free annual credit report, which will include all of the information your creditors have reported as part of your credit history. You’ll also want to make a spreadsheet of all your current balances, due dates, interest rates, monthly payments, late fees, annual fees, and other important loan terms for your credit counselor to evaluate.

Determine Your Monthly Income

Evaluating your monthly income is just as important as assessing your debts when it comes to deciding whether debt consolidation may be a good option for you. Because the key to debt consolidation is making a timely set payment every single month, you’ll want to make sure that you have access to enough reliable income to pay for living expenses and your monthly consolidated debt payment consistently.

If you earn a regular paycheck, use your two most recent paycheck stubs to calculate your monthly income. As long as they are representative of your typical pay, you should be able to determine how much monthly income you can reliably count on to cover your regular expenses and make your monthly debt consolidation payment.

If you do not earn a paycheck, don’t panic. Non-wage earners whose principal income is Social Security benefits or other assistance can still use debt consolidation to their advantage. Wage earners whose income is irregular may also benefit from debt consolidation, but they will need to pay special attention to whether they reliably have income available to pay for living expenses as well as a debt consolidation payment consistently.

Put Together Your Budget

The reason it is so important to get a realistic picture of your monthly income is that this information impacts your ability to create an accurate monthly budget. A budget is a summary of the income you bring in every month and the expenditures you pay out. The difference between the two is known as your disposable income. There are two categories of expenditures tracked in a monthly budget – fixed costs and variable costs. Fixed costs are those expenditures that do not fluctuate more than $10 per month, such as a mortgage payment, car loan, student loan or insurance. Variable costs are those expenditures that fluctuate from month-to-month like utilities, gas, and groceries. If you have trouble preparing your budget on your own or you would like some assistance when taking this step, try using a spreadsheet or some personal finance software such as Mint or Albert.

Do the Math

You can get a quick preview of what your debt consolidation payment may look like by doing some relatively straightforward math. To come up with this figure, you will evaluate your total debt, current total monthly debt payments, and disposable income. Take your total debt balance (of those unsecured debts you’d like to consolidate) and divide it by 60. This number represents your monthly debt consolidation payment over a five year period. You should at least have enough disposable income remaining every month (after accounting for the other expenses listed on your budget) to make this payment. 

Review Your New Hampshire Debt Consolidation Options

The last step you’ll want to take before applying for a New Hampshire debt consolidation loan is to review your debt consolidation options. We discussed earlier how debt consolidation can involve securing a new unsecured personal loan, refinancing your mortgage, opening a home equity line of credit or doing a credit card balance transfer. You can also avoid securing new credit by consolidating your debt via a debt management plan. You’ll want to evaluate the pros and cons of each option before committing to an approach. 

• Credit card balance transfer. Pro – usually quick and has little impact on your credit score. Con – can only consolidate credit cards and promotional interest rate may increase before you pay off the balance transfer.

• Refinancing your mortgage. Pro – usually a lower interest rate and can pay off any type of debt. Con – can be a long process, will usually result in a higher monthly mortgage payment and extends the time required to pay off your mortgage.

• A home equity loan. Pro – low interest rate and can pay off any type of debt. Con – loan is secured by the equity in your home and puts your home at risk if you fail to make the payment.

• Unsecured personal loan. Pro – can pay off any type of debt, has little impact on your credit score. Con – usually requires good credit. May not come with a lower interest rate.

• Debt management plan. Pro – one single monthly payment. Does not

require good credit. May come with a lower interest rate. Con – will need to work with a nonprofit agency to create this plan, which can take some time.

Apply for a New Hampshire Debt Consolidation Loan

When selecting a lender to fund your New Hampshire debt consolidation loan, there are a few rules of thumb you should keep in mind. For example, you should carefully go over any offers you receive unsolicited in the mail. Many of the terms and conditions advertised in these offers do not apply to everyone who receives them. You should never pay a lender up front before your loan is funded. Also, never deposit unsolicited checks you receive in the mail. All of these precautions will make it less likely that you will be scammed or taken advantage of by unethical organizations.

If all else fails, and you are unable to get approved for a New Hampshire debt consolidation loan or cannot find one with terms you are happy with, a debt management plan is a viable alternative. A debt management plan does not require that you take out a new loan and is available to you regardless of your credit score.

How to Stay Current with Payments After Consolidating Your Debts in New Hampshire 

You now understand how debt consolidation works, know how to determine what type of debt consolidation is best for you, and are ready to apply for your own New Hampshire debt consolidation or DMP. To better ensure the success of your debt consolidation process, you’ll want to be prepared to remain current with your New Hampshire debt consolidation payments once your consolidation is finalized. The following is a list of suggestions that will help you stay current with your New Hampshire debt consolidation and deal with potential pitfalls if and when they arise:

• Keep track of your spending. Otherwise, you may find yourself without enough in the bank to cover your payment.    

• Check the due date for your debt consolidation payment. Does it fall on the same day as another large expense? If so, ask your credit counselor about changing it.·        

• Try to create an emergency fund. Setting aside a little extra money every month for unexpected expenses like car repairs or urgent care visits will prevent having to use your debt consolidation payment for these emergencies.        

• Ask your bank or credit union to make your debt consolidation payment for you. Most banks and credit unions offer automatic payments that will pay your bills for you each and every month out of your designated account.