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How to Consolidate By Yourself

You can consolidate your debts on your own. This can be done by carefully planning out how much you will need to pay off all of your debts, then applying for a bank loan to cover those debts.

Once you have the bank loan, which should be at a lower interest rate than your other loans, you can begin. Be sure the bank loan or mortgage is at a lower interest rate than your credit cards or student loans were, or you may end up owing more in the long run.

Try calling your creditors to negotiate. They may be willing to remove some charges and fees if they know you are going to be able to pay them in full. This might save you a little bit. Remember that if you get a settlement - say, your debt is at 5K and the company accepts 3K, the $2000 will count as income for your next income tax return. Creditors may not be willing to work with you, but you may be able to at least get some fees reduced, or perhaps some late charges removed.

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 Once you have called all of your creditors, you can then send out all of the payments. Be sure that you have called all of your creditors to find out the exact amount you should send them, or you will end up with another bill next month for any interest which was added on after the last bill was sent out. It can be confusing, but take your bills one at a time and knock them out. Keep careful records of what you paid and when, and keep the cancelled checks attached to your copy of the credit card statement, so as to prove you should have a zero balance.

Once you've paid the creditors off, don't just charge up those credit cards again. You're still in the exact same amount of debt, you've just moved it around a bit, and hopefully lowered the amount you will eventually end up paying. Be sure to make your payments to this loan on time and in full, especially if you got a home equity line of credit or a second mortgage on your home - you do not want to lose your house. If your income does not meet your bills, try to cut back on expenses or increase your income rather than charging again, or you will end up in the same position, only this time with credit cards and a second mortgage or line of credit. Take the time to make a plan so you can be sure that by consolidating, you are choosing the easiest path to get out of debt.

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