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How to Consolidate Your Debts in Nebraska

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In a Nutshell

This guide provides a general overview of how to consolidate your debts in Nebraska. In addition to providing step-by-step instructions regarding how to get started, we have also included some best practices, tips and things to watch out for along the way.

Written by Upsolve Team
Updated February 11, 2020

If you find yourself thinking about what it would be like to make more than the minimum payment due on your ever-increasing debt every month, then Nebraska debt consolidation may be the solution you have been looking for. Debt consolidation works by combining multiple debts so that you only have to make a single payment every month on that consolidated debt. This process not only makes it easier to pay your bills every month, it also makes it easier to pay more than the minimum amount due. You can pursue debt consolidation with a loan or without a loan. A debt consolidation loan can take many different forms, depending on your financial situation. Some of the more common options include an unsecured personal loan, refinancing your mortgage, a home equity loan, and a credit card balance transfer.

You can also pursue debt consolidation without securing a new line of credit through something known as a Nebraska debt management plan. A debt management plan is a form of debt consolidation that combines your unsecured debts with the help of a non-profit credit counseling agency. A debt management plan consolidates your unsecured debt into one single monthly payment. This payment is then made to the non-profit agency that distributes it to your creditors in your debt management plan. A typical debt management plan may also lower your interest rate, lower your monthly payment, and waive over-the-limit and late payment fees.

Learn More Through Free Nonprofit Credit Counseling 

Before you dig into debt consolidation, you can increase your likelihood of success by taking advantage of free, non-profit credit counseling. Doing so not only educates you on debt consolidation but can also help you to determine whether this debt relief option is the best one for your situation. Free, non-profit credit counseling is a no-obligation, risk-free way of preventing yourself from making a mistake. Non-profit credit counselors work one on one with you to evaluate your personal finances, clarify your financial goals, and develop a long term plan for you to become debt-free. There is no cost for the initial credit counseling assessment and most non-profit credit counseling agencies offer credit counseling over-the-phone, online, and in-person.

To get a more thorough explanation of how debt consolidation works and what type of debt management alternatives would be best for you specifically, request a risk-free, no-obligation, free credit counseling session with an accredited non-profit credit counseling agency such as Money Management International, CESI, or Green Path. For help finding an accredited non-profit credit counseling agency in your area, feel free to contact Upsolve.

How to Consolidate Your Debts in Nebraska

This guide provides a general overview of how to consolidate your debts in Nebraska. In addition to providing step-by-step instructions regarding how to get started, we have also included some best practices, tips and things to watch out for along the way.

Collect the Details About Your Debts 

The first thing you want to do before determining whether Nebraska debt consolidation makes sense for you, involves collecting details about the debts you want to consolidate. For each account, track down details about your current balance, minimum payment, annual interest rate, due date, late fees, over-the-limit fees, annual fees, and other loan terms pertaining to your debt. Even though it is unlikely they will be included in your debt consolidation process, you should also collect details on secured and other long-term debts you may have such as car loans, personal loans, payday loans, and student loans. To be sure you do not neglect to include any of your debts, obtain a free copy of your annual credit report and review it at this time.

Determine Your Monthly Income

Creating an accurate picture of your monthly income is essential to successful debt consolidation. Your monthly income will determine how much you can afford to pay every month to consolidate your debts. To determine your monthly income, reference the income reflected in your two most recent paycheck stubs. Provided that these paychecks are typical of what you bring in every month and do not include overtime or other extra pay, they should give you an accurate picture of your regular monthly income. If you only get paid on commission or are self-employed and do not take a regular paycheck, make sure that it is clear that you always have access to enough income to pay your living expenses and still make your monthly Nebraska debt consolidation loan payment before committing to this process.

Put Together Your Budget

The next step in consolidating your debts in Nebraska involves putting together your budget. Your budget will serve as a ledger of the income you bring in every month and the expenses you pay out. Calculating your expenses requires some explanation as well. You should divide your expenses into two categories: fixed and variable expenses. Fixed costs are those expenses you pay every month that do not fluctuate more than $10 per month, like rent and insurance. Variable expenses are expenses you pay that vary from month-to-month like gas, grocery recreation, entertainment, and utilities. By deducting all of your expenses (not including the debt payments on accounts you hope to consolidate), both fixed and variable, from your income you will get your disposable income. The more disposable income you have, the more of your debts you will be able to consolidate.

Do the Math 

It’s now time to do some simple math to determine whether a Nebraska debt consolidation loan is a feasible debt relief solution for you. Using your total debt amount you hope to consolidate, current total monthly debt payments on that combined debt, and disposable income after fixed and variable expenses, you can project what your monthly debt consolidation loan payment might be and whether you can afford to pay it every month. First, take your total debt amount that you hope to consolidate and divide it by 60. Sixty is the number of monthly payments you would make to be debt-free in five years. Take the result and compare it to your disposable income. Your disposable income should exceed your projected debt consolidation loan payment. If it does not, that is probably an indication debt consolidation is not the best debt relief option for you. But before giving up on this opportunity, see if it is possible to increase your disposable income by looking at ways to lower spending on your variable expenses.

Review Your Nebraska Debt Consolidation Options

If Nebraska debt consolidation is feasible for you, the next thing you will have to do is decide what type of loan is best for your situation. When making this determination, there are a lot of factors that will play a role in your decision. These factors will include your current credit score, the amount of debt you need to consolidate and how long you would like to repay the loan. Before you make a final decision, consider weighing some pros and cons associated with the most common debt consolidation loan options:

  • Personal loans. If you have good credit and need to consolidate more than just credit card debt, a personal loan is a good option. However, you will need good credit and you may not necessarily get a low-interest rate on the loan.     

  • Credit card balance transfer. If you have good credit but most of your debt is credit card debt, a credit card balance transfer is a good choice. But approach this option with caution because they tend to feature promotional interest rates that will increase sharply if you have not paid the balance off by the time the promotional period ends.

  • Refinancing your mortgage. If you own your home, refinancing your mortgage to pay off debt is a popular way of pursuing debt consolidation. Note that while refinancing will usually significantly lower the interest rate you pay on the debt, it will also increase the balance owed on your mortgage. You will also be taking unsecured debt and securing it with your home.

  • A home equity loan. Similar to refinancing, a home equity loan usually offers a very low-interest rate on the debt you consolidate. But just like refinancing, you are taking unsecured debt and securing it with the equity in your home. Meaning, if you default on the loan you risk losing your home.

  • A debt management plan. A debt management plan does not require you to take out a new loan and does not require you to have good credit. Like a debt consolidation loan, a debt management plan consolidates your unsecured credit card debt into one single monthly payment. You then make the payment to a non-profit agency which then distributes it to your creditors. 

Apply for a Nebraska Debt Consolidation Loan

The last major step you’ll need to take when setting up debt consolidation in Nebraska involves selecting a lender to fund your debt consolidation loan. When you first start inquiring about debt consolidation, you will probably come across many different lenders competing for your business. Traditional banks and credit unions, mortgage companies, online lenders, and credit card providers will claim they are a better choice than the others. In order to help you make an informed decision and reduce the likelihood of being scammed or taken advantage of, here are some best practices you may want to follow:

  • If possible, deal with your own bank or credit union. Ask your account representative what options are available for debt consolidation and whether you qualify for any of them.

  • Try to avoid online lenders and direct mail companies who make claims that sound too good to be true. Review any offers or ads you come across thoroughly and always read the fine print.

  • Never deposit any checks you receive in the mail that you were not expecting to receive. This not only exposes you to fraud but may obligate you to repay far more than you received.

  • Compare the terms and conditions you can get with a debt management plan to the terms and conditions you are offered with a debt consolidation loan. A debt management plan can consolidate your unsecured debt regardless of your credit score. 

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

Once you have consolidated your debts with a Nebraska debt consolidation loan, the last thing you probably intend to do is fall behind on your payments. But even with the best intentions, unforeseen circumstances can cause you to miss a payment and get behind on your Nebraska debt consolidation loan. Fortunately, they are a few things you can do now to stay current with your payments after consolidating your debts, including:

  • Make sure your payment is not due on the same day as other large monthly expenses. If it is, ask in advance to have the due date changed.

  • Track your monthly spending. You should never miss your debt consolidation loan payment because you have already spent the funds that were supposed to be reserved for this purpose.

  • Prepare for unforeseen expenses. Set extra money aside to pay for unforeseen expenses like car repairs, insurance increases or medical bills.

  • Start an auto bill pay. Ask your bank or credit union to enroll your debt consolidation loan into an automatic bill payment program. This way, the payment will get made whether you remember to pay it or not.

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Nebraska Debt Management Plan

You can enroll in a Nebraska debt management plan regardless of your credit score. A Nebraska debt management plan is a form of debt consolidation that works by combining your unsecured debt into one single monthly payment. Unlike a loan, a debt management plan is an agreement between you and your creditors that allows you to make single monthly payments to a non-profit credit counseling agency. Because there are no credit score requirements, a Nebraska DMP is a great alternative for anyone denied a credit card debt consolidation loan or credit card balance transfer.

Nebraska Debt Settlement

Nebraska debt settlement is an alternative to debt consolidation that may make sense for your situation if you have access to lump sums that you can offer to one or more of your creditors in exchange for partial debt forgiveness. Debt settlement is not a form of debt consolidation because with debt settlement you do not repay your debts in full. Debt settlement usually depends on using a potentially costly for-profit debt settlement company to settle your debts for you. 

Nebraska Bankruptcy

If your income is sporadic and unpredictable, or you simply don’t have access to enough income to make the debt consolidation process work for you, then a Nebraska bankruptcy may be a more logical alternative to debt consolidation. Bankruptcy legally eliminates your debts and gives you a financial fresh start. And with a Chapter 7 bankruptcy, you can be debt-free in as little as three months. Upsolve has helped thousands of individuals who could not afford to hire a bankruptcy attorney, file bankruptcy on their own for free. Find out if we can help you!

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