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How to Consolidate Your Debts in Missouri

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In a Nutshell

Consolidating your debts in Missouri is a relatively easy process. Whether you choose a new loan or you choose to enter into a customized debt management plan, you can pursue Missouri debt consolidation by following the steps provided below.

Written by Upsolve Team
Updated February 17, 2020

According to a study by CNBC, nearly 25% of all Americans are forced to go into debt while trying to pay for necessities. Struggling to make ends meet can make paying your bills difficult and becoming debt-free seem like an impossibility. If you are struggling to balance your regular monthly expenses with unmanageable debt, Missouri debt consolidation may be able to help you regain control of your personal finances. 

Debt consolidation works by combining your outstanding debt into one account. One account means one monthly payment. A Missouri debt consolidation may address most kinds of unsecured debt, such as credit card debt, medical bills, furniture or appliance loans, and personal loans. You can pursue debt consolidation in several ways. One way of consolidating your debts involves securing a new loan to pay off your other debts. You would then pay off that loan with a single (and ideally lower) monthly payment over a fixed period of time. This loan can take many different forms such as an unsecured personal loan, a home equity loan, a credit card balance transfer, or refinancing your mortgage to pull out equity.

Alternatively, you can pursue debt consolidation through a debt management plan. A Missouri debt management plan is a great option if you have poor credit as there are no credit score requirements and you can ultimately combine your unsecured debt without taking out a new loan. If a DMP is a good option for you, you’ll work with a non-profit credit counseling agency to construct your plan. You’ll then submit a payment to that agency each month and it will, in turn, pay your multiple creditors by distributing the funds provided by that payment. 

Learn More Through Free Nonprofit Credit Counseling

Whether you are no longer able to pay your bills and are seeking long term debt relief or you are simply anxious to get out of debt, you can benefit from a free credit counseling session. Anyone who has debt and wants to learn more about their debt management options can benefit from free, non-profit credit counseling. Debt and budget counseling is a great starting point for anyone feeling overwhelmed by their personal finances. This process is especially beneficial for consumers who struggle to pay their monthly bills, feel overwhelmed with debt, and/or worry that they don’t have enough saved. When you take part in free, non-profit credit counseling, you will meet with a certified credit counselor. Together, you and your credit counselor will assess your current financial situation, your income, expenses, and debts; establish financial goals for both the short-term and the long-term; and develop a realistic action plan to achieve those goals. You will leave the session with personalized debt relief recommendations. When applicable, credit counselors will also provide educational materials and referrals to additional resources and services.

You can sign up for a free credit counseling session through a number of accredited nonprofit credit counseling agencies such as Money Management International, CESI, or Green Path. For help finding additional non-profit credit counseling agencies trusted by Upsolve, feel free to contact us.

How to Consolidate Your Debts in Missouri

Consolidating your debts in Missouri is a relatively easy process. Whether you choose a new loan or you choose to enter into a customized debt management plan, you can pursue Missouri debt consolidation by following the steps provided below.

Collect the Details About Your Debts 

The more details you collect about the debts you would like to consolidate, the easier it will be to determine whether debt consolidation in Missouri makes sense for you. The best place to locate most of these details is on your monthly credit card statements and account statements for non-credit card debt. These statements should show your current balance, minimum payment, due date, interest rate, and annual fees. You should also gather details on other debts you owe, even if you do not plan on consolidating them. Having these details on hand will allow your credit counselor to make the best possible recommendations for your unique situation. To make sure you do not miss anything, it is a good idea to also obtain a free copy of your annual credit report to review the debts and accounts listed on this report.

Determine Your Monthly Income

Obtaining a clear “snapshot” of your monthly income is necessary before you can determine whether you can afford to make a debt consolidation payment every month, on time. Locate your two most recent paycheck stubs. They should give you a rough idea of how much income you bring in every month. Just to be sure they are representative of your typical pay. Do not use paycheck stubs with a lot of overtime or other extra pay. Doing so could exaggerate how much you really earn every month and regularly have available to pay your bills. 

Put Together Your Budget

After working out your monthly income, you will need to prepare a budget. A budget is a measure of your income and your expenses every month. When you create your budget, divide your expenses into “fixed costs” and “variable costs.” Fixed costs are those expenses that fluctuate less than $10 per month like your car loan, rent, student loans, and insurance. Variable costs are expenses that may change from month-to-month such as gas, groceries, entertainment, and recreation. These are usually bills you have some control over. Subtract your expenses from your income to get your disposable income. Disposable income is what you ideally have leftover every month to pay your bills. To make the next “section” easier, include any monthly debt payments on accounts you do NOT plan on consolidating in your “expenses” part of your budget. 

Do the Math

You can now use your monthly income and your budget to do some basic math and work out what your monthly debt consolidation payment will probably look like. Start by taking your total debt and dividing it by the number of months you would like to pay it off. For example, if you would like to pay it off in five years, then divide your total debt by 60 months. The result is an approximation of what your monthly debt consolidation payment would be. Next, compare this result to your disposable income. You should have enough disposable income left to comfortably make your debt consolidation loan payment every month. If you do not, try to adjust some of your variable expenses and see whether you can afford the payment after doing that.

Review Your Missouri Debt Consolidation Options

Missouri debt consolidation is not a one size fits all solution to everyone’s financial problems. Many individuals will not qualify for the Missouri debt consolidation loan of their choice. Others will not be able to secure a large enough Missouri debt consolidation loan, with a small enough payment, to consolidate a meaningful amount of their debts. As a result, it may help to review the pros and cons of each type of loan as you prepare to make your choice:

  • Credit card balance transfers are a good choice if you have mostly credit card debt. You can consolidate all of your credit cards onto one credit card, preferably with a lower interest rate.

  • Refinancing your mortgage to pull out extra equity, or taking out a home equity loan, to pay off debt is a good choice if you want to get the lowest interest rate possible. However, it can take a long time to complete and ultimately increases the debt on your home and puts your home at risk if you default.     

  • Obtaining an unsecured personal loan is a great choice if you have good credit, more than just credit card debt and can get a low-interest rate. If your credit score has already dropped however, this may no longer be an option.

  •  A debt management plan is a good choice for individuals who have poor credit, cannot do a credit card balance transfer and do not want to use the equity in their home to pay off unsecured credit card debt. A debt management plan gives you one single monthly payment on your unsecured debt. You make the payment to the non-profit agency of your choice and they pay your multiple creditors by distributing your single payment.

Apply for a Missouri Debt Consolidation Loan

Now that you are aware of all the benefits of a Missouri debt consolidation loan, you are probably anxious to apply for your own. Hopefully, you have also done a little research concerning debt management plans and considered whether one might be a good alternative to taking out a new loan. If you believe that applying for a debt consolidation loan is the best option for your situation, here are a few common-sense precautions to keep in mind:

  • Research your lender. You can research the track record of the lender you are dealing with through the Better Business Bureau or your state Attorney General.

  • Do not deal with aggressive or pushy lenders. Debt consolidation is a serious commitment that you should not be pressured or coerced into. 

  • Be leery of direct mail or Internet offers. Double-check the eligibility requirements and preconditions of any special offers you receive through the mail or online.

  • Never deposit any unsolicited checks you receive in the mail.

  • Never pay any money upfront before your loan is approved and disbursed. 

  • Remember that a debt management plan is an option worth considering if you don’t qualify for a loan with excellent terms. You do not have to commit to a new loan with a high-interest rate or large monthly payment to consolidate your debts. A debt management plan can consolidate your unsecured debt into one single monthly payment that you can afford.

How to Stay Current with Payments After Consolidating Your Debts in Missouri 

Most financial studies have shown that the key to successful debt consolidation is making your loan payments on time, or early, throughout the life of the debt consolidation loan or debt management plan. Here are some things you can do to stay current with your payments:

  • Set up automatic payments through your bank or credit union. This ensures your payment is made every month whether you remember to pay it or not.

  • Track your spending every month. Make sure you are leaving enough to make your payment when it is due.

  • Make extra payments. This can consist of paying a little extra every month or making two payments in one month.

  • Make sure your due date is realistic. Avoid a due date that falls on the same day of the month as other large expenses.

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Missouri Debt Management Plan

Applying for a new loan and taking on new debt with a Missouri debt consolidation loan is not the only way to pursue debt consolidation. A Missouri debt management plan is also a form of debt consolidation and is accessible to individuals with poor credit. Through a Missouri debt management plan, all of your unsecured debt is combined into one single monthly payment usually with a lower interest rate, extended repayment terms and waived over-the-limit and late fees. Instead of taking out a new line of credit, you will work with a nonprofit credit counseling agency to combine your debts. Once your DMP is in place, you’ll pay the agency a monthly payment and they will distribute that payment to your creditors. 

Missouri Debt Settlement

An alternative to debt consolidation is Missouri debt settlement. Many for-profit debt settlement companies solicit debt settlement as a form of debt consolidation, however, debt settlement does not fully repay your creditors what you owe them. Instead, debt settlement works by either you or a debt settlement company attempting to convince your creditors to settle your debts for less than they are owed. Debt settlement is not a good option for everyone because you must have a large lump sum of money available to offer your creditors and your debts must be severely delinquent before most creditors will even consider settling your accounts.

Missouri Bankruptcy

You are not required to complete debt consolidation before filing for bankruptcy. If you are no longer able to pay your bills, you’re being targeted by creditors, and your income is insufficient to cover your expenses, you can file for a Missouri bankruptcy. Bankruptcy both legally eliminates your debts and a bankruptcy stay puts an end to collections targeted at you and your family. There are several forms of consumer bankruptcy. To learn more about which is right for you, feel free to contact Upsolve.

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