How to Consolidate Your Debts in Alaska
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If you’re interested in learning whether debt consolidation is right for you, you’ll begin by examining your debts, income, and household expenses. If you’re a good candidate for debt consolidation, you’ll research your consolidation options, secure your loan, and begin paying the total amount due in monthly installments.
Written by Attorney Kassandra Kuehl.
Updated July 28, 2023
If you’re making monthly payments on multiple accounts to cover your debts, you may benefit from consolidating your debts into a single monthly payment. This process is commonly referred to as debt consolidation. Debt consolidation is different than debt settlement. Debt settlement requires you to pay off a debt in a single payment. A creditor will usually offer to lower your total loan amount due in exchange for a lump sum that serves to close out your account. Most Americans don’t have sufficient funds available to make debt settlement work. However, most Americans with multiple debts can successfully pursue a debt consolidation process if doing so is a good option for them. Most of the time, debt consolidation involves securing an Alaska debt consolidation loan. Although it’s usually best to secure an unsecured debt consolidation loan, alternative types of loans (including personal loans and home equity loans) may be considered under certain circumstances. Once an Alaska debt consolidation loan is secured, it is treated as a balance transfer so that you can immediately pay off the remainder of the debts you’re consolidating. Depending on your financial situation, you may choose to consolidate credit card debt, medical bills, car loans, student loans, and a variety of other kinds of debt. You’ll simply need to choose which debts to consolidate carefully, as some may already have a low-interest rate and may therefore not be good candidates for consolidation. Once your debts are consolidated, you won’t have to make multiple payments every month on the affected accounts. Instead, you’ll make a single monthly payment per your loan terms.
Learn More Through Free Nonprofit Credit Counseling
One of the best ways you can determine whether debt consolidation is going to be a good fit for your financial circumstances involves scheduling a free credit counseling session with a certified credit counselor. Many accredited, nonprofit credit counseling organizations offer a free credit counseling session to anyone who wants one. During your session, your credit counselor will ask you questions about your debts, income, expenses, and your financial goals. Your counselor will also look over any financial paperwork you have brought with you. At the end of your session, you’ll be given personalized recommendations regarding next steps. These steps may include securing an Alaska debt consolidation loan.
How to Consolidate Your Debts in Alaska
If you’re interested in learning whether debt consolidation is right for you, you’ll begin by examining your debts, income, and household expenses. If you’re a good candidate for debt consolidation, you’ll research your consolidation options, secure your loan, and begin paying the total amount due in monthly installments.
Collect the Details About Your Debts
Before you can determine whether it makes sense to consolidate your debts, you’ll need to examine each of them carefully. Some debts, including auto loans and personal loans, may already have a better interest rate than the one you’d be able to secure with your debt consolidation loan. Others, including student loans and existing home equity loans, may be long-term investments that don’t work well when consolidated with shorter-term debts, like credit card balances. A good way to track down all of your existing debt information with ease involves requesting a free copy of your credit report. In addition to giving you information about your credit score and credit history, your credit report will list all of your current debts in detail.
Determine Your Monthly Income
Next, you’ll need to gather detailed information about your monthly income. Debt consolidation works best when an individual has access to steady, regular income. Without steady, regular income, it can be difficult to avoid late and inadequate payments. If you’re partially interested in pursuing debt consolidation to raise your credit score, you’ll need to make your consolidated loan payments in full and on time. When examining your income, make sure to note how much of it is wage-based and how much isn’t. Also, note which sources of income are reliable and which are inconsistent. Ideally, you’ll want access to enough steady income to cover both your monthly expenses and your debt consolidation payment (at minimum) before you consider debt consolidation as an option. If your income doesn’t stretch this far, you may need to talk to a credit counselor about exploring alternative debt relief options.
Put Together Your Budget
How do you know if your income can reliably cover your monthly household expenses? Make a budget. When evaluating your expenses, take care to account for fixed expenses, unfixed expenses, and periodic expenses. If you only account for some of these expenses, your budget won’t be accurate. Fixed expenses are the same every month. Examples may include rent, insurance, car payments, and necessary medication. Unfixed expenses aren’t as predictable. Examples include food, entertainment, gas, and utilities that are affected by seasonal weather changes. Finally, periodic expenses only happen every once in a while. Oil changes, school supplies, and snow removal are examples of periodic expenses. You can budget for periodic expenses by calculating their annual costs and dividing those figures by 12 to arrive at how much you should budget for them monthly.
Do the Math
Now that you have detailed information about your expenses, income, and debt, it’s time to determine whether debt consolidation may be a good option for you. Does your income stretch to cover both your debt payments and your expenses? If so, great! You may still want to look into debt consolidation so that you can benefit from a single, lower monthly payment and a lower rate of interest. If your income doesn’t allow you to make all necessary debt payments while covering your expenses, can it at least stretch to cover your expenses and a consolidated debt payment? If so, then debt consolidation may work for you. If not, you may want to talk to a credit counselor about how you should approach your personal finances at this time.
Review Your Alaska Debt Consolidation Options
If you’d like to move forward with debt consolidation, you’ll need to examine your loan options. Most of the time, debt consolidation involves securing a loan to act as a balance transfer so you can pay off your existing debts and start paying your total amount due as a single account. Depending on your circumstances, you may be able to secure a zero-percent or low-interest personal loan from a loved one. Personal loans can be nice because they aren’t usually tied to origination fees and securing isn’t contingent upon having good credit. If you’re a homeowner, you may be able to use a home equity loan or HELOC to facilitate your debt consolidation process. If you’re concerned that your credit history will prohibit you from securing financing, you can look into debt management plans. However, chances are that an unsecured debt consolidation loan is going to be your best bet, as long as you are consolidating unsecured debts and work with a reputable lender. Just make sure that your origination fee isn’t unreasonable, your loan terms are fair, and you won’t be paying a higher interest rate than you are now.
Apply for an Alaska Debt Consolidation Loan
If you’re applying for a debt consolidation loan (as opposed to signing a personal loan agreement or entering into a debt management plan), you’ll want to make sure you’re working with a reputable lender. Many debt consolidation arrangements are scams, so you’ll want to be careful. A good rule of thumb is that if an offer sounds too good to be true, it probably is. One way you can better ensure that you’re working with a trustworthy lender is to research that lender’s reputation. The Alaska state attorney general and the Better Business Bureau can provide valuable information concerning your lender’s credentials and past behavior. Also, be wary if your lender seems particularly aggressive or asks for money before it has provided you with any services.
How to Stay Current with Payments After Consolidating Your Debts in Alaska
Once you’ve consolidated your debts, it’s important to keep up with your payment schedule. If you do, this consistency will help you raise your credit score. If you don’t, your late payments will reflect just as badly on your credit history as if you failed to pay credit card debts, mortgage payments, or auto loans on time. You’ve already done the challenging work of making a budget. Revising it whenever your financial circumstances change will help you stay on top of your payments. You can also help to ensure that you make your payments on time by setting your due date for a time of the month that you tend to have sufficient funds to pay your bills.
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Alaska Debt Management Plan
If you’re interested in debt consolidation but don’t want to take out a new loan, you may want to consider setting up an Alaska debt management plan. If you pursue this approach, an accredited, nonprofit credit counseling organization will negotiate new repayment terms on each of your debts. You’ll then make monthly payments to the organization, which will distribute those funds to your creditors per the terms of your debt management plan. You’ll likely benefit from lower interest rates, fewer monthly bills, and you’ll risk fewer late fees.
Alaska Debt Settlement
If you work with a reputable provider, debt settlement may be a viable option for you. However, you’ll want to tread lightly, as many debt settlement companies are scammers. Carefully research the reputation of the debt settlement company you want to work with before signing a contract. If you have funds available to make lump sum payments, you can use the Alaska debt settlement process to pay your debts in a single payment. Debt settlement often allows you to pay reduced overall principal and have fees waived, depending on what your creditors will agree to. Debt settlement may be a good debt relief option if you already have bad credit.
Alaska Bankruptcy
If your income doesn’t stretch far enough to allow you to meet your necessary household expenses and monthly payments of your debts, it may be time to consider filing for bankruptcy. Depending on your situation, you could become debt-free in as few as 90 days. You may even qualify for free assistance with your Alaska bankruptcy filing process. Even if you aren’t eligible to file for this type of bankruptcy, you can still file for Chapter 13 bankruptcy, which would result in the elimination of eligible debts after you complete a five-year payment plan.
