Tuesday, October 21, 2008

Debt Consolidation During Difficult Times

Debt consolidation is one of the solutions often used to help less serious debts become more manageable. Debt consolidation is a process where an agreement is reached with your creditors to achieve the lowest and most affordable monthly obligation needed to satisfy all your credit accounts. Whether it is in favor for the lender’s interest to recover the money or the improvement for the debtor’s credit history, debt consolidation may be the best solution.

There are numerous ways to consolidate debt and it is possible for all, regardless of credit history. Debt consolidation is a booming business mainly because so many people are finally coming to the realization that dealing with debt is much easier and less stressful than most common people think. Nevertheless, different companies may charge different fees for their services and also late payment charges and this can affect your loan repayment plans. Do research a reliable credit counseling company that can better suit your financial needs.

Debt consolidation is the process of consolidating all of ones credit card payments, medical bills, and payday loans or personal loans into one low monthly payment. The debt consolidation services offered generally includes a debt repayment plan that eases your payments by reducing your interest rates, stop collection calls, erasing your late fees and  restore your credit rating. Consolidation can affect the ability of the debtor to discharge debts in bankruptcy, so the decision to consolidate must be weighed carefully.

There are other alternatives to a debt consolidation loan, where unsecured debt is not "shifted" to secured debt, but is eliminated through a settlement or payment plan. A settlement will cancel out a portion of the outstanding debt. For example, if a person has acquired $60,000 in credit card debt, a debt settlement may reduce the balance owed to $30,000. Debt settlement is not intended for a quick and easy fix to your debt problem as this resort may affect your credit history and thus prevent future lenders in extending a line of credit. 
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