Though not a popular subject matter, debt consolidation is a matter that affects millions of Americans. Though unpopular, it is a far more pleasant topic than bankruptcy. Indeed, debt consolidation is a means of avoiding bankruptcy and remaining financially solvent. The effects of a bankruptcy are designed to be disruptive for years following the dismissal of debts. Securing a new line of credit can be agonizing and ultimately frustrating. Consolidation often entails taking out one loan to address you various debts. This new loan typically enjoys a lower, fixed interest rate and often proves more manageable for families and individuals alike.
Debt consolidation, at heart, is the amalgamation of smaller debts into an all-encompassing loan locked at reduced interest rate. Though some consolidation service will grant unsecured loans, most services require the loan be secured against some form of collateral, more often than not, a home or vehicle. The collateralization of the loan provides for a lower interest rate as the debt is secured against a profitable asset. Failing to pay off a collateralized loan often entitles the holder of the loan to take possession of said home or vehicle. In essence, since the risk of losing money is lower, so too, then, is the amount of interest on the loan.
It should be noted that a number of consolidating companies are willing to forgive or reduce large portions of the debt. This is preferable to losing the loan and the debtor to bankruptcy. It would behoove the smart debtor to shop around for the best offers. Though seldom mentioned by consolidation companies, a consolidation agreement can seriously affect a debtors chances of having his or her debts dismissed by a bankruptcy judge. For this reason alone, it would behoove the potential debtor to think twice before jumping on the consolidation bandwagon.
There are a number of possible debt solutions. It is generally accepted that debt consolidation is a viable option for anyone trying to pay down credit card debts. Credit cars notoriously carry high interest rates. To combat this, debtors with viable forms of collateral can borrow against this collateral, securing a second loan to pay off their credit cards. This second loan, secured against say a house, can e paid off sooner as it enjoys a significantly lower interest rate.
Around every silver lining is a gray cloud. Some unscrupulous consolidation companies are content to charge ridiculous processing fees that are close to state maximums. Worst of all, these fees are not directly disclosed. Some companies realize all too well that a client does not have the time he or she needs to shop his or her debt around. In these cases, the consolidation company can charge any ridiculous fee it wants, knowing that the client in backed into a corner. A sword of Damocles can be worth millions. It should be noted this form of last minute lending is also known as predatory lending. Dont be a victim " research all the available debt solutions before signing anything. Your home could depend on it.
Debt consolidation, at heart, is the amalgamation of smaller debts into an all-encompassing loan locked at reduced interest rate. Though some consolidation service will grant unsecured loans, most services require the loan be secured against some form of collateral, more often than not, a home or vehicle. The collateralization of the loan provides for a lower interest rate as the debt is secured against a profitable asset. Failing to pay off a collateralized loan often entitles the holder of the loan to take possession of said home or vehicle. In essence, since the risk of losing money is lower, so too, then, is the amount of interest on the loan.
It should be noted that a number of consolidating companies are willing to forgive or reduce large portions of the debt. This is preferable to losing the loan and the debtor to bankruptcy. It would behoove the smart debtor to shop around for the best offers. Though seldom mentioned by consolidation companies, a consolidation agreement can seriously affect a debtors chances of having his or her debts dismissed by a bankruptcy judge. For this reason alone, it would behoove the potential debtor to think twice before jumping on the consolidation bandwagon.
There are a number of possible debt solutions. It is generally accepted that debt consolidation is a viable option for anyone trying to pay down credit card debts. Credit cars notoriously carry high interest rates. To combat this, debtors with viable forms of collateral can borrow against this collateral, securing a second loan to pay off their credit cards. This second loan, secured against say a house, can e paid off sooner as it enjoys a significantly lower interest rate.
Around every silver lining is a gray cloud. Some unscrupulous consolidation companies are content to charge ridiculous processing fees that are close to state maximums. Worst of all, these fees are not directly disclosed. Some companies realize all too well that a client does not have the time he or she needs to shop his or her debt around. In these cases, the consolidation company can charge any ridiculous fee it wants, knowing that the client in backed into a corner. A sword of Damocles can be worth millions. It should be noted this form of last minute lending is also known as predatory lending. Dont be a victim " research all the available debt solutions before signing anything. Your home could depend on it.
About the Author:
Anyone in need of viable debt solutions wold be serving their best interests to find a reputable debt consolidation company. The world of debt solutions is vast, be sure you do your research.
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