Debt Consolidation: No House? No Problem.

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Debt consolidation can be a great alternative to an often overlooked group of people – those without a home. People who need to manage debt but do not own houses generally can be categorized into two groups: (1) those who do not want to own a home but still want to reduce high interest debt, or (2) those who feel they cannot own a home because high interest debt has damaged their credit. The good news for both groups is that nearly every major creditor in America participates in debt consolidation, and owning a home almost never is required.

Content to Rent

As home ownership increases, many experts ignore the fact that the market of people who continually rent also is quickly growing. Eventually, these renters may create their own rules for a secure living situation. For example, perhaps debt consolidation itself eventually may become a way to transpose renting into home ownership.

Debt consolidation no longer is used just to promote home ownership. In large part, this is because home ownership has become another way of using debt to capture profit. Individuals may delay on purchasing a home because they are using consolidation as a tool for a wide range of financial possibilities and not just for the end of attaining a house.

If your credit has not been tarnished, many banks - and almost all credit unions – will consider loaning to you even if you do not own a home. In some circumstances, especially for individuals who own businesses, there is the possibility of obtaining unsecured (no collateral) loans. Usually, such loans are granted from a financial institution that has a good history with the borrower.

Many people who do not own homes are surprised to discover that they have collateral in the strangest of places: cars, stocks, annuities, jewelry, etc. However, it is almost never worth it to use this collateral to secure a loan from any type of payday advance establishment or auto title company. Interest rates at such companies are astronomical, and added fees tend to deplete any promises of lenient terms and conditions.

If you are having difficultly getting loan without a house, or if your credit scores are not good, then you still may need to look into the same options as those who would like to own a home - the unwilling renter.

Not Content

Many renters would prefer to live in their own home, and utilizing debt consolidation can be a good means by which this can be achieved. Applying tools that go along with debt consolidation can, and should, put anyone who wants to buy a home on the path to doing just that. Individual circumstances such as the amount of debt, amount of income, job stability, and medical or childcare costs will make some cases easier than others. Still, there are basic actions that everyone in this situation can take, and good results can be expected within six months.

How can you benefit from debt consolidation without taking out a loan? The answer is simply “DMP” – a debt management plan, as created for you by a consumer counseling agency. If you are able to pay your monthly costs of living (rent, utilities, phone) but nothing more (like credit cards), then you should consider a DMP. In a separate debthelp.com article, you can learn about the differences between a DMP and other options.

More information about DMPs:

• At present, FICO credit scores are not damaged by participation in a DMP.
• Many people create DMPs with nonprofit financial counselors because of their financial situations. Fees should be low in such circumstances.
• Your enrollment probably will end creditors’ harrassing phone calls.
  

Legendary basketball coach John Wooden once said, “Failing to plan is planning to fail”. No matter what your financial hardships, the greatest equity you have is planning. You do not need a house, nor do you even need to want a house, in order to benefit from debt consolidation.