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Debt Consolidation Help Transform From Debt Ridden to Debt Free

 


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People who regularly borrow money to pay their bills on time need debt consolidation help. They usually pay one credit card balance using another, and miss paying one bill to pay another one. They are perennially running short of cash and are often stressed out from having to deal with numerous creditors.

A single payment is made wherein the repayment tenure of debt is increased and the overall interest rate is decreased, as compared to making payments to many creditors, each charging a higher rate of interest.

One could go to a company that specializes in consolidating all existing debts of a person. Such companies may either charge a monthly fee or interest. One could also approach non-profit organizations for free debt help.

Process Of Debt Consolidation

Irrespective of whom one goes to for debt help, the process remains the same. It would entail:

  • Giving the consolidator the details of one's account names and numbers, income and expenditure and the arrears owing to the creditors. He would then analyze the data and decide the quantum to be allocated towards settling of the debts.
  • He would get in touch with the creditors and negotiate a repayment schedule with them. Since such organizations have more bargaining power than an individual, they can get the creditors to lower the interest rates and waive off the penalties.
  • Thereafter, the monthly installment would be paid to the company, which in turn, would apportion it amongst the creditors.
  • The accounts would be frozen till the repayment is complete.
  • Companies that specialize in consolidation of debts offer credit help by giving either a secured or unsecured loan. A secured loan is one in which the borrower has to place an asset as collateral with the company. He can also take a home equity loan. An unsecured loan is taken for a shorter term and has a higher interest rate. With a variable rate debt consolidation loan, it is possible to make additional repayments when one has surplus funds. In a fixed rate loan, only a fixed repayment can be made during the loan term.

    Advantages And Disadvantages

    Merging your debts has the following advantages:

  • Reduction in monthly payments
  • Getting some mental peace as the debt is being repaid
  • Dealing with only one creditor
  • The disadvantages are mentioned below:

  • Additional cost has to be borne for setting up the loan.
  • If the loan is secured, the property will be at risk.
  • When getting debt consolidation help, one should be careful to select a legitimate lender or else the process will worsen your financial condition. To choose the best lender, one should compare quotes from different organizations; find out the exact charges, interest rates and penalties. One should also make inquiries about their reputation.

    Debt consolidation help is a boon for people who are deep in debt. Debt consolidation credit help can be received from companies that specialize in this. One can also get free debt consolidation help from non-profit organizations.

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