| Debt consolidation aims at debt reduction that enables | | | | to negotiate with only one lender. |
| consumers to congregate their credit card debts and | | | | - Helps in credit improvement because the timely |
| other unsecured loans into one single debt. This is done | | | | payment of loans will help to better your credit score |
| with a view to servicing simply one loan and getting a | | | | and rebuild credit ratings. |
| lower interest rate. Here rather than ceding payments | | | | - Credit monitoring helps to protect against identity |
| to banks, money is handed over to a debt | | | | theft and fraud through regular inspection of credit |
| consolidation company that is thereafter responsible | | | | reports. |
| for dispersing funds on your behalf. On behalf of the | | | | Drawbacks of Debt Consolidation: |
| client interest by applying professional knowledge the | | | | - The feeling of actually having less outstanding loans |
| company helps to negotiate a lower interest rate, | | | | may result in further debt. |
| lower balance and monthly payments and fixes a term | | | | - You may be forced to pay higher interests if you |
| for the debt to be completely paid off. | | | | stretch payments unnecessarily. |
| While this is usually from numerous unsecured loans, it | | | | - Failure to pay up may amount to loss of property if it |
| can also entail a secured loan against what is called | | | | is involved in the debt consolidation process. |
| collateral or an asset like a house. This reduces the | | | | - Some attractive offers may be scams. So consult |
| interest rate because collateralizing ensures that the | | | | financial experts and undertake thorough research |
| owner of the asset will agree to have the asset sold | | | | before you seek it. |
| so as to repay the loan. | | | | Checks to see if Debt Consolidation is the best option: |
| Debt Consolidation Process: | | | | |
| | | | 1. Get your credit report from a credit monitoring |
| 1. The company examines your financial status to | | | | agency to see the amount of credit card debts and |
| calculate the maximum amount to be paid every | | | | unsecured loans you have. |
| month. | | | | 2. Contact a couple of such companies and go |
| 2. Your creditors are informed that henceforth all calls | | | | through their respective qualification requirements. |
| must be made to the debt consolidation company. | | | | 3. Calculate accurately how much you stand to gain |
| 3. The company then engages in negotiation with | | | | with such a program as against paying up your credit |
| creditors to lower interest rates and waive additional | | | | card payments. |
| charges levied. | | | | 4. Without enough cash to cover a big mortgage |
| 4. A month's payment is then made to the company | | | | payment, this is not the right option for you. |
| which distributes it amongst your creditors. Creditors | | | | Debt consolidation effectively means one more debt |
| send confirmation on receipt of payments. | | | | and if you accept that without taking necessary |
| 5. The company will continue to assess your debt | | | | measures you could be slowly heading towards |
| status twice a year and accordingly revise the | | | | graver financial crises like bankruptcy. An effective |
| payment structure on the basis of free credit reports. | | | | debt management plan with assistance of experts is |
| Benefits of Debt Consolidation: | | | | vital when you adopt this debt relief strategy. |
| - Low interest rates and low monthly payments. | | | | Please visit the following link to get a free debt |
| - Additional charges are waived off. | | | | consolidation analysis and further help to relief your |
| - You get to choose to keep one loan and you have | | | | debt and improve the credit scores. |