Debt Consolidation in Montana: Is It For You & How to Do It?

Fortunately, inflation has climbed to its peak and is steadily planning a descent. In short, the worst is over. But, the consequences of the rise will likely stick around for more time and continue to stress Montana residents.

For example, food prices are expected to increase by 11% this year alone, and electricity prices will continue to soar in Montana.

So, if you're one of the Montana residents relying on personal loans and your credit balance has surpassed the average credit card debt of $5,223, it's not surprising.

But, if you have multiple debts to keep tabs on every month and high-interest rates eating into your savings and financial goals, things can get too complicated to keep up.

Debt consolidation is a sound approach to keep your monthly debt obligations simple and your interest manageable.

What is Debt Consolidation?

Debt consolidation is a debt relief strategy that can help you pay off your unsecured debt faster and cheaper. How?

Say you have three credit card debts that you're struggling to pay off each month - likely due to the high-interest rates.

So, you take out another loan with a lower interest rate in the amount of the total unpaid debt, pay off the balance entirely and stick to a budget to make a single low-interest monthly payment to the new loan.

As a result, you avoid the stress of managing multiple payments while saving money on interest.

In short, it's a simple refinancing strategy.

But is it for all kinds of debt and everyone?

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What Kind of Debt Can You Consolidate in Montana?

• Credit card debt
• Payday loans
• Unsecured debts in collection
• Medical bills
• Utility bills
• Student loan debt

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When is Consolidating Your Debt a Good Idea?

All great financial strategies only make sense in certain situations and for certain people. The same goes for debt consolidation.

This debt relief option will work for you only when -

• You curb your impulsive spending habits.
• You avoid running up more debt.
• You live within your means.
• You avoid borrowing more money.
• You should be 18 years old.
• You shouldn't be involved in bankruptcy or foreclosure proceedings.
• Your credit score should at least be in the mid - 600s (although some lenders accept credit scores of 600 or even less)
• Your debt-to-income ratio should be at or below 45 percent.

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When is Consolidating Your Debt Not a Good Idea?

• You have an off-the-rail spending habit.
• You're overwhelmed by unpaid debt with no hope of paying it off, even with reduced monthly payments.

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Debt Consolidation Alternatives in Montana

You should avoid getting into the obligation of a debt consolidation loan to pay off old debts. Or your spending behavior needs to fall in line with the prerequisites. Or your debt is so overwhelming that it's more than what you can manage to pay off by consolidating.

Whatever the reason, other debt relief services can be beneficial -

• Debt management - Debt management is a way to get control of your unsecured debt by making a budget and optimizing your everyday expenses.
• Bankruptcy - Bankruptcy gives a person or business a chance to start afresh by getting rid of debts they can't pay. It also gives creditors a chance to get some of their money back based on the person's or business's saleable assets.
• Debt settlement - Debt settlement companies can help you resolve your unpaid debt for far less than you owe by negotiating with the lender and mutually agreeing on a substantial lump-sum payment.

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Debt Consolidation Options in Montana

If you are eligible and want to go ahead on this path, there are three debt consolidation options that you can choose from -

Debt Consolidation Loan

You can get a debt consolidation loan from online lenders, banks, or credit unions. If you qualify, the lender will deposit the amount into your bank account so that you can later use it to pay off your debts. Or some lenders can also send the loan proceeds directly to your creditors to pay off your unsecured debt.

Once the older debt is paid, you can start making monthly payments toward the new debt consolidation loan. Payments stay fixed for the life of the loan.

Best Debt Consolidation Lenders in Montana

• Upgrade - Best Overall
• Sofi - Best for Debtors with Good Credit
• Upstart - Best for Debtors with Low Credit Score

Balance Transfer Credit Card

If you carry large balances on multiple credit cards, you can use a balance transfer card to combine your debt. Most balance transfer cards offer 0% APR in the introductory period, which usually lasts between 12 and 21 months.

By putting all your balances on one such card, you can pay off your debt faster and avoid interest.

Best Balance Transfer Credit Cards

• Wells Fargo Reflect Card - Best for a long introductory APR period
• Citi Double Cash Card - Best for cashback
• Bank of America Customized Cash Rewards Credit Card - Best for choosing your rewards.

Home Equity Loans or HELOC

A home equity loan offers a lump sum of cash. A HELOC, on the other hand, is like a credit card - it provides a revolving line of credit available for use as needed. Both of these loans demand your house to serve as collateral.

This type of loan is a good choice if you have significant equity available in your home.

Interest rates for home equity loans and HELOCs are usually much lower than debt consolidation loans (if your credit score is higher), and the repayment period is longer.

Best Home Equity Loans or HELOC Lenders

• Discover - Best for low fees
• Flagstar - Best for large HELOCs
• Truist - Best fixed-rate HELOC

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Debt Consolidation Checklist

When it comes to debt consolidation or any financial strategy, preparation is the secret sauce for success. So, here's a checklist to keep in mind -

• List all the debts you want to consolidate, the name of the respective lender, the total amount owed, interest rates, and the minimum monthly payments.
• Get a copy of your credit report from Equifax, TransUnion, and Experian.
• Make a budget and try to trim or cut off extra expenses like subscriptions to streaming services or dining out.
• Stop using your credit cards.
• Consider the pros and cons of each debt consolidation option and determine which is best for you.

Debt consolidation is a relatively simple strategy. But the steps leading up to it and the discipline it demands can be overwhelming. A top-rated debt consolidation company can assist you.

Working with a consolidation company can also be helpful in case your debt has gone to collections. They can provide financial assistance by negotiating with the debt collection agency on your behalf and mutually settling on a repayment plan.

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Steps to Choose the Best Debt Consolidation Company in Montana

• Shortlist the top 5 debt consolidation companies that interest you.
• Research the companies to find out how long they have been around and their track records. Typically, a longer track record of success indicates a company's ability to work well with creditors.
• Check to see if the companies have the necessary licenses in the states where they do business.
• Find out your shortlisted companies' Better Business Bureau (BBB) rating.
• Check if the debt consolidation companies are transparent with their fee structure.
• The company you select to go ahead with should have an established history of satisfied customers. So, besides considering good ratings, go through the debt consolidation companies' customer reviews.
• Find out if your chosen agency provides a free initial credit counseling session.

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Information that Debt Consolidation Companies in Montana Must Disclose

Remember: before entering into an agreement, debt consolidation companies should disclose in writing the following information -

• The type and amount of fees that they'll charge.
• The impact the program might (or might not) have on your credit history.
• The amount of money you will save with its debt consolidation program.
• The collection activity may continue until the owed debt gets paid.
• You are required to stick to a budget and meet certain savings goals.
• Other debt relief services are available if you need more than consolidation.

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Debt Consolidation in Montana FAQs

1. Can I close my credit card after consolidating my credit card debt?

Ans. Closing the card will lower your credit score as it lowers your available credit. Have someone you trust hold on to them.

2. Do the consolidation companies help with budgeting if I seek help from them?

Ans. Yes. Debt consolidation companies help with budgeting. The goal is to come up with a budget, considering your income, the amount of debt you owe, and other financial factors so that you can be debt-free at the end of the program with little to no compromise on your financial goals.

3. When getting out of debt is the primary concern, what is better, debt settlement services or a debt consolidation loan?

Ans. Consolidating your debts into a single loan may make sense if you only want to save money on interest and pay a single lower monthly payment.

However, suppose your debt is more than you can handle (even with a lower interest rate). Deb settlement is a better option if you're already behind on multiple payments and your creditors are threatening legal action.

4. Can I consolidate debt if I have bad credit?

Yes, you can. But you'll likely get a higher interest rate on the debt consolidation loan and won’t qualify for a balance transfer credit card. You can try to get a HELOC or home equity loan or go for other debt relief services.

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Disclaimer: This article is for informational purposes only and does not constitute legal advice. Please consult a qualified attorney for advice on your specific situation.