Are you struggling to repay your bills? Do you want to avoid bankruptcy? Have you heard about Debt Consolidation?
Some think that debt consolidation might be a good way to help you re-organize your life. This debt consolidation review will discuss the benefits, features and advantages of this financial relief system. Finally, the hope is that this information can help you make the best financial decision as to whether debt consolidation is for you.
Falling Behind in Payments
When you incur high debt, you will probably have signed up for a number of different loans over time. You might have a separate housing, automobile and credit card payment each month. Unfortunately, it can be difficult to keep track of the terms and conditions, interest rates and repayment dates.
The financial laws require you to not only repay your debt, but make timely payments. If you have missed a payment, then the bank will charge you a late fee. Technically, they have the right to call your entire loan in for repayment.
What is Debt Consolidation?
Of course, you probably don’t have all the money, laying around to repay your full loan, do you? If you did, you wouldn’t have taken out a loan in the first place. So, what can you do?
Debt consolidation is a debt relief program, which is an alternative to bankruptcy. Many people want to steer away from the negative consequences of bankruptcy. After bankruptcy, you might not be able to get any new loans.
The red flag of bankruptcy also stays on your credit report for years. You are forced to go before a court, the judge will learn everything about your debt problems and decide where your money will go. Bankruptcy can be very intrusive and make you feel like a failure.
How Does Debt Consolidation Work?
If you want to keep your finances private, then bankruptcy alternatives are preferable. Debt Consolidation involves your taking out a brand new loan to cover all of your disparate loans – mortgage, automobile and credit cards. This will give you one single date and interest rate for your repayment, so you can avoid late fees.
Debt Consolidation Advantages
The beauty of this debt relief program is that you can choose which loans you include and which you leave out. This is also a great way to show your creditors that you are serious about finding a debt solution. And, you can do this privately; it does not need to be done in any public court.
Another common reason for undertaking this action is to get a lower interest rate. You might have a high credit card interest rate because it is unsecured credit. When you consolidate your loans, you can get a mid-range interest rate (cars and houses are secured credit). Therefore, you might be able to save some money on the long-term costs of the loans. But beware, there will be charges for consolidating your loans.