Debt Consolidation Strategies To Get Rid Of Despair
Debt Consolidation Helps You Get Your Life Back On Track
Debt consolidation is not something that worries people who have no money worries.
But if you struggling with your loans, it is recommended that you brush up on your knowledge.
Have you been suffering from sleepless nights thinking of how you could afford to settle your debts?
Well, you are not alone if you are in that situation.
The good news is lots of people have risen from the depths of financial despair thanks to debt consolidation and this might be something that could be of interest to you, or someone you know.
This is a process whereby a loan is taken out to pay all the other existing loans.
The new loan is normally offered at a lower rate of interest but with an extended repayment period, and because of the nature of this type of loan, some people know it as a consolidation loan.
Basically, you find a company which will both work with you and also work on your behalf, meaning they will be the ones to deal with your creditors.
Your consolidator, as they are also known, becomes the one responsible for paying your debts at an agreed time with your creditors.
All you have to do is make one single payment each month.
This is really helpful if you are facing huge amounts of debts from different creditors. Imagine being able to avoid the trouble of paying multiple debts on multiple due dates! No more “stealing from Peter to pay Paul”.
Another great thing about debt consolidation is it saves you time and a lot of worry answering and dealing with calls from collection offices, or the unexpected and embarrassing knock on the door in the evenings or at weekends.
Calls that give you warning about loan payments are proven to be very stressful and no person in his or her right mind welcomes this kind of phone conversation, that seems to border on harassment.
You will be relieved to know that once you have entered into a debt consolidation agreement, your consolidator is the one responsible for settling your credit and you can kiss those incessant warning calls goodbye. What a relief!
There are basically three extremely popular approaches to go about debt consolidation and they are bank loans, balance transfer, and professional debt consolidation.
- Bank loans – If you have a qualifying credit that can obtain a personal loan or perhaps a home equity loan from the bank, (or other credit facility), in order to consolidate all your loans, you may use the funds from this loan to pay off other debts. Basically, loaning from the bank incurs lower interest rates than an average credit card. This is why a bank loan is ideal to use as payment for high credit card bills and debts incurred from recurring interest rates. Home equity, on the other hand, may be quite risky since your home is taken as collateral against your loan. Heaven forbid, should you fail to pay your debts, your home is at stake.
- Balance transfer – Transferring your credit card balance is a temporary debt consolidation strategy. This process is done by transferring balances from high interest cards to a lower one for a certain fee. Most often a transfer of balance comes with low introductory offers that last from six months to a year, but this “advantage” is short lived.
- Professional debt consolidation – A professional debt consolidation company offers, naturally enough, consolidation services. It works with creditors and debtors and arranges the most reasonable repayment terms including a favorable change in the current rates of interest, that benefits the debtor.
Learning about the various option schemes involved with debt consolidation programs and services could be beneficial tor you if you have been toying with the idea of consolidating your loans to help you manage your debts a lot easier and to help get your life back on track.