What is Debt Consolidation?
Debt consolidation is when your creditors agree to roll all your credit accounts into one which requires a minimum monthly payment. This is handy when your debt is tied up in credit cards, personal loans, student loans and a mortgage. Debt elimination can be achieved with a good debt consolidation strategy as devised by a reputable company or consolidation service.
Although this won't reduce your debt, debt consolidation loans certainly take the weight off this high monthly payment. It's often possible to reduce payments by as much as 75% each month. Debt negotiation can take place with your creditors or through a debt consolidation program. Consolidation agencies can demand your creditors stop contacting you and this is why many people choose to go through a reputable debt consolidation service.
A good loan consolidation center will advise you on the best route to take to consolidate all your debt. If you have bad credit, they can also assist you in repairing this.
Debt consolidation loans should only be considered when your situation is dire. Because they can extend your payments to as much as 30 years, it's important that you understand that they are a long term commitment.
Debt Consolidation loans usually require you to offer your house as collateral. If you don't own a house then you may need someone to go guarantor for the loan. It is a good choice to get a consolidation loan when you have a large amount of credit card debt due to the high interest rates of credit cards.
Here we have covered the basics of debt consolidation. Please see our other articles for more on this topic.
