What are the best ways to debt consolidation loan and collections during and after the coronavirus pandemic?

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The best options for debt consolidation in the aftermath of and during the coronavirus pandemic are DIY repayment programs, debt management plans with credit counseling organizations that are non-profit as well as, in instances of a well-established consumer discipline and debt consolidation loans.

Although the pandemic hasn’t caused any new options for debt consolidation whether private, non-profit government, or otherwise the economic, social and financial turmoil that it has caused has raised the importance in the minds of consumers to eliminate debt in the quickest, most efficient and as cost-effectively as is feasible. Consolidating debts could be a reference to the combination of several debt BALANCES in a single account, or the consolidation of several monthly debt PAYMENTS into one single monthly installment.

But, debt consolidation can not mean the same as reduction of debt. Consolidation is a procedure, whereas reduction is a way to go.

Debt Consolidation remains a vague Concept

In times of natural and financial disasters or when national and global economies are experiencing steady growth and stability, the phrase “debt consolidation” provides only a vague and unfinished image for consumers who struggle to find assistance in settling their debts. For consumers, the term generally refers to the reduction of their plan of repayment for debt.

Consolidation of debt allows the consumer to concentrate on one payment instead of several. The fact that debt consolidation is not a guarantee consumers’ interest rates will be reduced or that the balance of debt will shrink. The rate at which interest rates and balances decrease or increase depends entirely on the option the consumer selects for consolation.

The debt consolidation options listed below are listed alphabetically, with the least expensive suitable, appropriate and, in general, the most beneficial starting first, and the most harmful and expensive options come last.

Do-it-yourself Debt Consolidation

While it’s not strictly speaking a debt consolidation strategy however, it does feel as if it’s a debt consolidation plan and allows you to simplify your monthly debt payment. To make this happen yourself, begin by determining the day of the month which you can most comfortably be able to afford paying your debts. With mortgages, rents and numerous subscription bills due at the start of each month, many people find that a date for debt repayment in the second half of the month to be most suitable and beneficial.

Then, you should contact all of your creditors to ask for an extension of the due date for your payments that you previously identified. Be aware that you’ll typically encounter difficulties requesting an individual creditor to change the deadline from one month into the following (e.g. from the 27th day of this month until the 8th day of the next month). However, the majority of them will be willing to work with you when you request them to shift the due date for payments back to the beginning of the month, particularly when you’ve made your payments on time in the last year or longer.

Then, you can set up automatic repayments of your debts in order to alleviate the stress of remembering the date and time to pay. You can select between two kinds of automated payments either through bill pay online as well as direct debit.

Online Bill Pay

You can setup online bill payment through your checking account at home generally through your bank’s app or the app of your credit union or through their online portal. Add a new payee (your lender) with the appropriate email address and payment time, and the amount to be paid.

Since this process typically relies on mailing a payment It is important to allow ample flexibility when you determine the due date for payment. If, for instance, you are due to pay the bill on the 20th day of your month, then you could be required to schedule the payment to be sent out at the time of 10th. Even if the payment is not received by the due date the creditor is likely to be held accountable for any late charges and not the bank or the postal service.

The major drawback to this method is that it has limitations on the amount of payment. For credit cards with balances that change every month, this approach could not meet your requirements because it requires that you establish the monthly amount of your payment.

Direct Debit

The process of setting up direct debit transactions involves adding your bank account details (account as well as routing number) to your creditor’s payment portals. Every month, your creditors withdraw the money directly from your account. You may choose a predetermined amount for the payment as well as the minimum payment (rarely suggested) or the entire amount. The appeal of this option is its simplicity and the transfer of obligation to pay the creditor. If the creditor fails to take the payment prior to when it is due (and it happens every now and then) they are not able to charge you the late fee. Of course, if a creditor tries to withdraw the money from your account but finds that the funds are not sufficient and they charge you an insufficient funds charge.

Debts You Can Include

Because neither of these strategies require changes to your monthly due date the creditors will generally not have issues with these arrangements. It is possible to combine (automate) your payments on your mortgage, credit card vehicle or truck payments as well as student loans and older utility bills and cellphone accounts. If you have child support to pay You might want to add that as well for convenience’s sake.

Debt Shuffles

If the idea of setting up multiple automated repayments to pay your debts doesn’t match your objectives The next thing to consider could be the “debt shuffling.” Shuffles of debt are the process of moving your debts from several accounts into a single, fresh account. They’re true consolidations however, they may create a false impression of improvement in your debt.

The two main types of debt shuffles include transfer of the debt balances to a single credit line or repaying them using you home equity. The latter option, however, will help to pay off your debts. Debt shuffles function similar to the bandage applied to an injury. They are used to treat the symptoms not the root cause. In reality, if your debts are a result of excessive spending on consumption, one of these strategies could end up leaving you with a debt that is twice what you began with.

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