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To consolidate debt is to roll all of your outstanding debt into one lump sum for payment simplification. You can consolidate credit card debt by securing a personal loan to consolidate debt or by joining a debt consolidation service.
To consolidate unsecured debt is really to simplify your monthly bill paying process. Instead of paying multiple bills, you'll make one payment per month. If you find it difficult making minimum payments each month, are repeatedly paying late, or have trouble organizing multiple bills, you may want to examine how to consolidate debt online with a debt consolidation service.
For a free consultation click here.
One way to consolidate debt is to secure a personal loan to consolidate unsecured
debt. Unfortunately, a personal loan to consolidate debt is often the first and only solution people think of
when dealing with a financial problem. Approximately 75% of those who follow this route
to consolidate debt actually find themselves in deeper financial trouble than
when they began. A personal loan to consolidate debt transfers debt from one place to another. It's often a short term fix with long term consequences. A personal loan to consolidate debt will not reduce what you owe. You will still repay 100% of the loan plus interest. To simply consolidate unsecured debt will not get you out of debt more quickly and may make things worse.
A personal loan to consolidate debt is often secured by collateral, such as real estate. When you consolidate unsecured debt by taking out a secured personal loan, you exchange unsecured debt for secured debt. A personal loan is typically stretched over a 15 - 30 year period, leaving you open to the loss of collateral over this period. If you run into further
difficulty in the future you stand to lose the collateral that secured loan - often your home.
Another large problem that some run into is once they secure a personal loan to consolidate debt, they suddenly have newfound spending power: empty credit cards. Unfortunately, it is not long after you consolidate credit card debt that your old cards are once again maxed. Now you have to repay both the personal loan to consolidate and the credit cards. Being in debt will leave you with less disposable income or even worse, not enough to pay for life's necessities. Although a personal loan to consolidate debt may result in lower payments, it may also increase your total debt load. Is your goal to get out of debt or to prolong your situation for the next 10 to 30 years?
Another option is a debt consolidation service. They offer to consolidate debt into one monthly payment. While with a debt consolidation service, you'll pay them a fee in addition to your total creditor payments each month. The debt consolidation service will disburse the payments to your creditors. A debt consolidation service is often funded by the very creditors that you owe. The more they consolidate credit card debt, the more your creditors pay the debt consolidation service. A debt consolidation service could also save you money. However, a debt consolidation service will not always lower your interest rate, although that is the implied goal. A debt consolidation service has pre-negotiated interest rates with your creditors. If the rate is lower than yours, your rate will be reduced. However, if the debt consolidation service has negotiated a rate higher than yours, your rates may actually increase. Lastly, you are relying on a third party to make your payments for you. If the debt consolidation service is late or makes an incorrect payment, you will be penalized. When you hire a debt consolidation service to consolidate debt, you receive a mark on your credit stating you are paying through a debt consolidation service. Many lenders view this as a negative. If you consolidate debt online, you will only have to make one payment each month to the debt consolidation service. But you will not reduce your principal and you will still pay interest. Isn't your goal to get out of debt, not to prolong it?
A better option than a personal loan to consolidate debt or a debt consolidation service may be Debt Settlement.With our personalized
Debt Reduction program, we negotiate on your behalf to eliminate your debt. Furthermore, in
Debt Settlement, the amount of money you owe, your
principal, is actually reduced versus with a debt consolidation service, only the interest rate is reduced.
And with a consolidation loan, you need to obtain the new loan to pay off your existing debt.
If you have too much debt or bad credit, it is unlikely you would qualify for a personal loan to
consolidate debt. We can greatly reduce your debt so you don't have to apply for a personal loan to
consolidate debt or join a debt consolidation service. Click here
for a free consultation from Knockout Debt.
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