How Can Debt Consolidation Helped Me To Become Debt Free

By Stephen James
Debt consolidation is the process of taking out one loan in order to pay off other loans(s). Consolidating debts can either involve consolidating from a number of unsecured loans into another unsecured loan, or more commonly it involves consolidating a secured loan against an asset that serves as collateral, (e.g a house). If this is the case, then a mortgage is secured against the house for security. Occasionally, debt consolidation companies will provide a discount on the amount of the loan. If the debtor is in danger of bankruptcy, then the debt consolidator can purchase the loan at a discounted rate. A keen-eyed debtor can then easily look around for other consolidator companies who will pass along some of the savings made. This however, can also affect the ability of the debtor to get rid of any debts during a period of bankruptcy, and so the decision to consolidate must be thought through carefully, ideally with the help of a professional debt consolidation expert. Also, debt consolidation is often recommended when someone is paying off a credit card debt. This is because credit cards often have a much larger interest rate than an unsecured loan from a bank would have.

Debtors with property like a home or a car may get a much lower rate with a secured loan using their house or car as collateral, then the total interest and the total amount of money put towards paying off the debt is much lower thus allowing the debt to be paid off much quicker thus incurring less interest in the long run. In reality though, many people get into credit card debt because they just simply spend more than their income allows, and if this habit continues for too long, then the consolidation will hardly benefit them at all as they will simply be increasing their credit card balances again thus starting the whole process over again. Collateralizing loans allows for a much lower interest rate than if done without it, and by collateralizing, the asset owner agrees to allow the forced sale (which is called foreclosure) of the asset in order to pay back the original loan. The risk to the lender is therefore greatly reduced and so the interest rate offered by the lender is therefore much lower. Therefore, with the right guidance and assistance, debt consolidation will work and should prove great benefit to you in helping you become debt free once again.


How can debt consolidation benefit me?

Debt consolidation can be very beneficial if done right, here are the main key points as to why you may want to consider debt consolidation:

1. Becoming debt free is much quicker

If successful through to the end, then a good debt consolidation program could possible make you debt free within just a few short years (and will also save some money for you along the way!). It is no secret or surprise that a debt free life is a glorious dream for many people who are in debt, and such a consolidation program should easily enable this dream to come true for you and allow you to live a much happier and more financially secure life thereafter.

2. No more payment collection calls

This is a simple one but one that can also make your life a lot happier and worry free, as placing your debt management under a consolidation program, you can stop all the collection calls too which are often quite harassing and a cause of worry for many people.

3. Multiple payments become one simple monthly payment

This works well because each credit card and loan have completely different monthly dates when the loan payment is due, so using debt consolidation you can combine these multiple monthly payment into one simple easy payment giving you much less worry and hassle and also more control over the situation. Then, once the debt is consolidated, you only need to remember the one payment due date as it is only one payment. The advantage and benefit here is that debt consolidation will make your life much easier in terms of managing your debts and will also help ensure you don't have any late payments and helps to prevent any late payment charges.

4. Reduced interest rate

Good negotiation with your creditors on your behalf by a professional should get you a much lower interest rate. Then, with the new lower interest rate, your monthly payments should also be a lot less than what they used to be before the consolidation took place.

5. Give you a better credit rating

Everyone knows that if you are making late payments then your credit rating starts looking worse and worse and your credit score will therefore go down as a result of this. What debt consolidation will do for you, is allow your accounts to begin to pay themselves off, and as a result, you will start to build good credit and will therefore see your credit rating begin to rise again.

Stephen James has great experience in advising and assisting people on how to live a debt free future with debt consolidation and has a great website dedicated to the subject: free debt consolidation [http://free-debt-consolidation-advice.blogspot.com].

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