Debt Consolidation The Proper Way
February 5, 2015 Leave a comment
If you’re having trouble with debt and paying your bills, you are not alone. Although signs show an upturn in the economy, many Americans are deep in debt, and not everyone can work overtime or a second job to pay down that debt. That’s where debt consolidation and other financial options come in.
What is Debt Consolidation?
Debt consolidation is a widely used term that can imply the use of a number of different debt assistance plans that combine multiple debts, loans or payments. There are three main types of debt relief options available: Debt Consolidation Loans, Student Loan Consolidation, Debt Management Plans and Debt Settlement. When done the right way, debt consolidation can:
Lower your interest rates
Lower your monthly payments
Help you get out of debt faster
Consolidating your debts by taking out one large loan or a loan secured against an asset, such as a house to pay off a combination of smaller loans or accounts, is not advised. It uses one lump sum to cover the amount owed on multiple accounts. However, that new loan is now secured. You have just taken an unsecured debt and collateralized it against your home or other personal property. By taking out a new loan, you may qualify for a lower or fixed interest rate and will only be required to make a single monthly payment.
A Debt Management Plan (DMP) is the preferred method of debt consolidation, which many people choose because they can substitute multiple monthly payments with just one monthly payment. A DMP is a type of payment consolidation that could result in lower interest rates to your creditors. This means that you can make one consolidated payment and have that payment split among all your debtors. Utilizing a debt management plan may not hurt your credit score.
The good news is that debt consolidation programs can help you become debt free.
National Debt Relief Program offers a free debt analysis which can be taken advantage of at their website:
Debt Consolidation News 