Have you ever heard about Debt Consolidation?
Debt consolidation or also called credit consolidation is the process of combining many debts into a single payment and also only one lender to pay. Although some people may called Consolidation Loan however a loan is different thing. Credit Consolidation usually also resulting in lower monthly payments, lower interest rate, secure a fixed interest rate of for the convenience of servicing only one loan.
Even Credit Consolidation may involve unsecured loans such as credit card bills, here then you called credit card consolidation, but it also possibility to collateral requirement to backing it up. By doing so, a lower interest rate is often available since there is something of value backing it up. This is not always necessary. It depends on your credit situation and you have to negotiate with your lenders. The collateralization of the loan allows a lower interest rate than without it, because by collateralizing, the asset owner agrees to allow the forced sale of the asset to pay back the loan. The risk to the lender is reduced so the interest rate offered is lower.
Consolidation vs. Loans
Credit consolidation means a consolidation of multiple debts, into one debt, and one payment. Although it is often paired with the word "loan" by banks and mortgage institutions offering a "credit consolidation loan" to escape from the debt pressure, you should thing in different way. Consolidation is different thing comparing with loans.
Some credit consolidation loans end up as interest second mortgage on homes. Just remember, second mortgages on your home only increase the amount of money owed in the long run. By putting all of your debt on the most precious asset you have, you run the risk of losing your home for the sake of credit card or other debt. You may even be overextended to the point where you might not qualify for a mortgage. And if you do, the terms will not be favorable.
Credit consolidation I the original idea means to decrease the amount of money owed in the long run. Consolidating your debt in a single low-interest loan can save on interest payments and speed the process of paying off debts. By the credit consolidation you can achieve benefits such as:
- Lower Monthly Payments
Lower payments puts more cash in your hand each month. Debt consolidators can reduce your monthly payment up to 50% in some cases, while still paying off your bills in less time.
- Interest Reduction
Reducing interest means that by making payments you are actually paying off your debt, instead of just covering the amount of interest. This can reduce your time to pay off your debt by 10 or more years! Also you can have your payment cut by up to 60%here so you can save thousands of dollars and avoid bankruptcy.
- One Monthly Payment
Instead of making multiple monthly payments to creditors, you make one monthly payment to the debt management company.
- Improve Credit
Many creditors will "re-age" your account, bringing your accounts current, when you being the debt consolidation plan. This will improve your credit rating. Paying off your debts entirely will also improve your rating.
- Late and Limit Fees Gone
Once in a debt consolidation program, creditors will eliminate late and over the limit fees. Then, creditors will usually apply that money to your balance.
- End Creditor Harassment
Enrolling in a debt consolidation program will usually end creditor phone calls. However, if a creditor still call your, your debt consolidation firm will usually resolve the issue on your behalf.
Are you in financial trouble?
The first step to knowing whether you're potentially in financial trouble is to know how much you spend each month to pay off debts and other ongoing obligations. If any of the following statements apply to you, you may have a debt problem.
- I do not have savings because I exhaust my savings to pay for my debt.
- I only pay the minimum payment on my credit cards.
- I have been declined credit or declined a credit line increase.
- After I pay for my bills on credit cards, I get as much or more debt the next month.
- I am dependent on credit cards to support my lifestyle.
- I am very near or over my current credit card limit.
- My credit cards have been declined.
- I depend on cash advances.
- I hide bills and credit card statements from family members.
- I float checks.
- I bounce checks.
- I get collection calls from creditors.
How to do Debt Consolidation?
All of this Debt Consolidation process can be confusing. While individuals may approach their creditors to try and arrange lower payments, suspension of interest, and other ways in which to help relieve their debt load without declaring bankruptcy, a consumer is best served by using a good credit consolidation service. Credit consolidation experts are trained professionals with years of experience, in negotiating a debt consolidation into one low monthly payment, which in the end will benefit both you and the creditors. It is better to contact a qualified credit consolidation company. You just explain your debt situation. The firm will get the required debt and finance information from you and then they will call your creditors and negotiated on your behalf.
Companies or businesses that are owed money, would naturally like to see it paid. They are generally more receptive to the approach of a professional debt consolidation counselor with a well thought-out debt consolidation plan, than the individual debtor who may not have considered all the angles.
Lower rate were already pre-set by your creditors, but usually the debt consolidation firm can negotiate lower monthly payments, lower interest rate and reduce or eliminate late fees. This allows you to pay one, lower bill and pay off your debts in lesser time. In return you must agree to pay, on time, the agreed upon lower payment while meeting other living expenses. You also have to stop increasing your debt or using your credit cards.
Whether you choose credit consolidation on your own, or though a counseling agency, be sure to carefully read the terms of the credit consolidation agreement which is drawn up between you and your unsecured creditors. Remember, this is NOT a credit consolidation loan. It is simply a consolidation of all debts into one monthly payment, which is more manageable with your budget.
There are many debt consolidation firms. Choosing the right firm is very importance, as some firms may use dishonest tactics in their consolidation loans. Your creditors will quit harassing you when they know that you are working with debt consolidation. If they do call, a good debt consolidation firm will usually call them for you and explain the situation.
Debt Consolidation as a Business
With most households deep in debt, it is no wonder that they are searching for ways to ease their financial burdens. As a reaction, debt consolidation business has itself become a multi-million dollar industry.
Although some people could obtain a similar overall outcome by tackling his/her situation personally, the advantages of using reputable debt consolidation firm should not be dismissed. A good firm will employs trained and experienced professionals and likely they could achieve creditor negotiation results a bit more quickly.
Numbers of strategies can be employed by debt-strapped families to reduce their liabilities. Just remember that debt is generally created over time, here so will only be eliminated over time. And in order to change financial situation, you must change your attitudes concerning money.
Don't drown in your debts, use smart management instead. Rather than paying off many separate bills each month one can use debt help systems to combine their monthly payments into one easy-to- manage bill per month. Debt consolidation gives you the power to get out of debt with the help of a Certified Debt Repayment Representative. Finally, you have someone on your side to negotiate with your creditors and stop harassing collection agencies.
You can visit No Debt Today online (the internet's most trusted, free debt consolidation program since 1997) to reclaim your financial freedom by free online credit consultation.
- Quick approval Strictly confidential
- Expert Loan and Bill Consolidation
- Identifying Debt Problem
No Debt Today values your privacy by protecting your information using the latest 128bit SSL technology, so you can rest easy knowing your debt help request is 100% safe and secure.
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