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Debt Consolidation FAQ

Today, it is nearly impossible for hard-working individuals to get by without accruing debt. From school debt to credit cards, the average consumer’s life is fraught with loose financial ends to tie. Who isn’t looking for relief options when debt reduction is essential? Most people receive phone calls from a collection agency seeking monthly payments. Late fees are tacked onto unpaid debt, making debt relief seem like a distant and unattainable future. So, some choose to take the route of debt consolidation. This is where multiple loans can be transferred to a single loan; the consumer takes out one loan to pay off various others. One might take out a consolidation loan to secure lower, sometimes fixed interest rates. Consolidation can be daunting, so here are a few frequently asked questions.

What are some reasons why I might want to pursue debt consolidation?

debt-reduction

Credit cards usually come with a high interest rate than consolidated loans, so those with high credit card debt can benefit from credit card debt consolidation that comes at a lower interest rate. People might take out student loan consolidation for student loans, bill consolidation or even consolidation on personal loans. Those close to bankruptcy can benefit from consolidation because a debtor can discount the amount of the loan. For these reasons, consolidation means effective debt management.
Consolidation can work in favor of the borrower with no negative impact to financial security.

Do I need collateral to be eligible for debt consolidation?

Often times a consumer who has collateral to his or her name – a home (as in a home equity loan), vehicle or otherwise – can take out an equity loan wherein collateral is held against the loan. Even unsecured debt is sometimes eligible for consolidation.

How do I consolidate credit card bills?

A consumer can consult his or her debtor about credit card consolidation. Credit rates are usually lower in consolidation, to the consumer’s advantage. In this way, credit card balances can be lower much faster.

How do I consolidate student debt?

Borrowers can apply for federally insured student loan consolidation on the internet, thanks to The Higher Education Act. Borrowers in need of consolidation can contact the Student Loan Consolidation Network, among other consolidation companies.

Who offers consolidation services?

There are a multitude of debt consolidation companies to be found via the internet. Consumers want to find a company to offer consolidation loans that is verified by debtCC. Credit counseling should be sought to ensure that consolidation is indeed the wisest route. Counselors will look at a borrowers’ credit report to establish credit rating. Counseling will also take personal finance into account – the ways in which the individual or family lifestyle interacts with debt accrual, such as yearly spending, specific costs, annual budgets.

Are there other options for debt management if I am not eligible for consolidation?

Debt settlement is sometimes an alternative to debt consolidation, in which the debtor and creditor agree on a reduced balance that will be regarded as payment in full.

TAGS: Debt Consolidation

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