With more than 8% of Americans finding themselves currently unemployed, debt consolidation has become a more common occurrence. When you find that your credit card debt is growing, while your income is taking a dive, debt consolidation may be your best answer. If you are considering this option, it is important to understand the types of debt consolidation that are available.
Debt settlement - This option of consolidating your debt is available for individuals whose debt is more than $10k. In debt settlement forms of debt consolidation, the amount of debt is negotiated by a third party. Once an amount is agreed upon, an escrow account for your settlement payments is then established. Debt settlement payments are then made monthly.
Debt consolidation loans - Loans used to consolidate debt utilize an individual’s assets as collateral against the loan. When choosing a debt consolidation loan, an individual is able to pay off some, if not all, existing debt. However, the sheer nature of debt consolidation loans can be risky. Putting ones real estate up as collateral can lead to foreclosure if the individual defaults on the loan.
Debt management plans -Also known as credit counseling, this option is typically the preferred manner of debt consolidation. With a debt management plan, several (if not all) of an individual’s unsecured debts are combined into one lowered monthly payment. Debt management plans allow an individual to pay down debt in one payment as the agency coordinating the DMP negotiates the amount of the debts.
Debt consolidation has many benefits. The benefits associated with debt consolidation include: stopping creditor harassment, single monthly payments, and improving your credit score.
Debt consolidation allows individuals with large amounts of debt to pay it off faster than traditional bill payment. As the third party negotiates your debt amounts, your interest rates are also typically lowered if not eliminated.
If debt consolidation seems a viable answer, the first step is to research local debt consolidation companies. Review their success rates, and make sure that they are registered with the Better Business Bureau. Once you have established that they are a reliable company in which to pursue your debt consolidation, set up a counseling session.
Many debt consolidation companies offer an evaluation at no cost to you. In the course of the counseling session, you will be made aware of your options. It is at this point you can decide which means of debt consolidation is best suited for your situation.
Regardless of the reasoning behind your having chosen debt consolidation, it can be the answer to your problems. Debt consolidation can be a far more practical alternative to bankruptcy. As with any other large financial decision, make sure to do your research to insure that you have the best experience possible with management of your debt consolidation.
This is a good post.
With the availability of various debt consolidation and debt management plans, some unscrupolous individuals have taken it upon themselves to go around and inform people that their credit card debts are illegal and that there is no need for them to make any payment. It, therefore,goes without saying that we need to be vigilant and cautious about the debt solutions that are being offered to us
Comment by click4credit — April 19, 2009 @ 1:16 am