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Consolidating your finances

Wednesday, December 16th, 2009

Debt consolidation is a debt relief option that has helped many debtors to get out of debt and enjoy a debt free life. You can derive benefits from debt consolidation too provided you are serious about this option that can bring financial stability in your life. You can seek assistance of a debt consolidation company that will help you in enjoying better financial terms. This is achieved either with the help of a debt consolidation program or a consolidation loan.

How will debt consolidation program give you financial stability?

When you approach a debt consolidation company, they will assess your financial situation, ask you to provide extensive information about your debts, the rate of interest attracted by each debt account etc. Thereafter, they will negotiate with your creditors so that you can enjoy a lower rate of interest. Once the interest rate is reduced, your payments become lower too. You will be required to make payments as per a payment plan that is worked out taking your convenience into account. So, a debt consolidation program will help you to make your debts manageable. The payment schedule helps you to keep track of the payments each month.

How can a debt consolidation loan help you?

A debt consolidation loan is one that will replace your multiple debts with a single loan. If you have 4 debt accounts and the outstanding balance on each debt account is USD$500, USD$150, USD$200 and USD$700 respectively, you take out a consolidation loan of an amount USD$1550. You can either use collateral or take out an unsecured debt consolidation loan. It is always better to take out a debt consolidation loan that is unsecured. This is because you will not lose your home if you fall behind on payments.

However, if you are planning to take help of a debt consolidation company, make sure it is accredited by the Better Business Bureau and find out its past records and credentials. Remember a good debt consolidation company will not run after you, it should be the other way around. You should shop around for a good debt consolidation company.

In a nut shell, whether you opt for a debt consolidation program or a consolidation loan, it can do the following for you –

  • It will merge all your debts into one thereby making them manageable

  • As you become regular with your payments, your credit score improves
  • You enjoy reduced interest rate and lower payments each month
  • The repayment schedule allows you to make debt payments in an organized and systematic manner.
  • You don’t receive collection calls from debt collectors
  • Your debt load is reduced considerably
  • Finally you get a debt free life

So, if you are in a vicious cycle of debt tackle your debts efficiently so that you don’t have to walk around bankruptcy courts. Manage debts while they are still young.