A debt management plan, or DMP, is offered by credit card debt consolidation companies. What happens in a DMP is your cards will all be closed.
The company you choose to work with will negotiate your interest rate down and set up a repayment plan. You will pay one fixed monthly payment to the consolidation company that is then dispersed to your creditors, minus their fees.
However, these loans will require good credit history, usually at least a 660 FICO score or higher is required.
But this is one of the cheaper debt relief options because it’s a low-interest loan.
However, instead of having two mortgage payments with two lenders. A lender will refinance your primary mortgage plus give you up to 80% of the value of your home in cash.
One of the great benefits of a cash out refinance is that the credit requirements are lower than home equity loans.
So, if you have bad credit what are your options for consolidating your debt? Transactions are not always black and white, relationships play a big part in a credit union.
If you have been with the same credit union for a long time the likelihood of getting approved for a debt consolidation loan with poor credit is increased.
RATE SEARCH: Get Cash Using Your Home Equity A debt consolidation loan is a personal loan that pays off multiple debts, such as credit cards and student loans.If you have low average to bad credit (below 660 credit score) you may still qualify for a debt consolidation loan but the interest rate will be high.Rates can be as high as 30% in some cases defeating the purpose of a debt consolidation loan.While a debt consolidation company is a great option to consolidate debt with bad credit. You will just have to call each creditor to close your account, explain your financial situation and negotiate the rate down and set up a monthly repayment plan.If you own your own home and have built up equity you can use that equity as collateral for a loan.
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Debt consolidation loans for bad credit are either not possible, or come with high interest rates.