Monday, April 5, 2010

Debt and debt consolidation

Debt consolidation is the procedure of combining multiple high-interest unsecured debts into one low-interest debt, which you can pay off with only one monthly payment. The amount of this payment is figured out after a thorough evaluation of your budget. For many people who are struggling to keep up with their monthly financial obligations, debt consolidation works as a truly helpful debt relief solution. It also offers a number of advantages to the consumers and is a good substitute to bankruptcy.

Falling into debt is easy but becoming debt free isn’t. You can only achieve financial independence if you follow a bill consolidation program seriously. Some of the most common benefits offered by consolidation are given below:

1) Interest rate reduction

A consolidation company carries out negotiations with your creditors on your behalf to reduce the interest rates. This leads to reduction of your monthly payments and this helps you save some money.

2) One affordable monthly payment

When you enroll in a consolidation program, handling your payments becomes easier than before. Rather than making multiple payments to various creditors, you only need to handle one monthly payment. This helps you keep tabs on your expenses and devise a sensible budget. You don’t have to be concerned about missing payments any more.

3) No harassment from your creditors

When you sign up for a consolidation program, you don’t have to deal with your creditors directly and this saves you from creditor harassment. This helps reduce your stress level and attain peace of mind.

4) Your late fees and over limit fees are waived

With expert negotiations, the consolidator can convince the creditors to eliminate your late fees and over limit fees so that the repayment becomes convenient for you.

5) Credit counseling for free

Many consolidation companies provide credit counseling services to educate the consumers so that they don’t fall into debt again and again. These counseling sessions are available without cost. Your financial situation would be analyzed by a skilled debt counselor and suitable options would be recommended to you. You would also come to know whether consolidation is the right choice for you. The concept is to help you become debt free with the solution that’s right for your needs.

6) Improvement of your credit score

When all your dues are repaid with consolidated payments, this reflects positively on your credit report and your credit score is enhanced.

Consolidation comes with a slew of advantages. However, you can derive maximum benefit from it if you’re sincere in making your consolidated payments and trying to spend less than you make each month.

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