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Debt consolidation is a financial method for paying off multiple creditors by taking out a new loan. The benefits of doing this are that the new loan may be at a lower interest rate, or at a fixed interest rate, or for the convenience of paying back only one loan instead of many.
Debt consolidation can be done several ways. * One way is to roll the multiple debts into an unsecured loan. * Rolling multiple debts into a secured loan. This means pledging an asset that serves as collateral, e.g., your home. * A third way is to take multiple credit card debts and transfer them into a single card account. Recently there has been a sharp rise in the number of people defaulting on secured debt consolidation loans. What this means is that people have had their home mortgages foreclosed because they couldn't stay current on the loan payments. And, in an era of falling home prices, they couldn't sell the home at a sufficient price to pay off the loan either. Another disadvantage of debt consolidation is that, sometimes, it only addresses the symptoms of debt and does not address the root problem. In these cases, the debtor “eliminates” multiple credit card debts but does not close the card accounts. As a result, the old cards are used to run up new balances and the debtor is back where she started. There are other alternatives to a debt consolidation loan. For example, debt can be eliminated through a settlement or payment plan. Conclusion: Debt consolidation can be confusing for many people, so it is helpful to learn about all of your options before entering into any legally binding agreements. For more info on credit card debt consolidation calculators, visit Ara Rubyan's Your Debt Consolidation Resource. Ara Rubyan is not a part of the banking or credit card industry, nor does he sell financial services. He is not a guru of any kind. Instead, he is like you: a consumer or business owner who has tried to find the best way to do debt consolidation and take control of his personal finances. Now, he's put all his research (so far) in one convenient location and he's sharing it with you, no strings attached. Visit his website; there, you'll find: - Plenty more articles on debt consolidation;
- Videos;
- An interactive poll;
- The latest news on the debt consolidation business;
- Space for your questions, answers and suggestions.
So go on over to Your Debt Consolidation Resource and have a look. |
