As the economic crisis drags on, debt consolidations have emerged as beacons of hope for millions of families. The opportunity to consolidate debt, reduce payments and get back in the black faster than they ever imagined has given these families a new lease on life.
If you racked up debt obligations in the good times and are struggling to repay them now that things have changed, a debt consolidation plan might work for you.
Here’s what you should know.
How Debt Consolidations Work
Debt consolidation programs work by taking out one last loan—a consolidation loan. When a debtor owes numerous creditors a variety of balances, missing payments can be easy. This simply adds penalties and can raise your interest rates sky high.
The existing interest rates on a number of your loans are probably pretty steep to begin with.
A consolidation loan lets a not-for-profit counseling agency buy up all of these debts and put them under a single payment, typically with much lower interest than you will get from a credit card company.
Debt consolidations, particularly a credit card consolidation, can also lower the balances themselves. Most credit counseling agencies offering these consolidation loans and programs were actually founded by major creditors.
As a result, they have strong bargaining positions which enable them to get many of your penalties and fees waived. Not only that, but they can actually negotiate to have the principal on your debt reduced so you can be out of debt sooner than you might think.
Improve Your FICO Score
One other bit of debt consolidation information to keep in mind is the dramatic impact tax debts and liens can have on your credit score. These debts are considered over and on top of any commercial or private debts you have, and thus hurt you more than any credit card debt might. The right credit counselor can usually get the government—the IRS, state or local taxing agencies—to drop penalties and even seriously lower your debt.
By paying this off immediately with your consolidation loan, your credit score will improve almost overnight.
Debt Consolidation Provides Solution To Credit Debt
This is perhaps the big reason why debt consolidations are so popular right now: the loan immediately satisfies your creditors, so consumer credit debt consolidation can turn your credit rating around immediately. With only a single payment left afterward, you will have new peace of mind and hope for the future.
No more dreading the mail, screening your calls or lying awake at night—you’ll likely be surprised how reasonable the payment is and how quickly you’ll be debt free.
Debt Consolidations: A Second Chance To Improve Your Credit Score
Debt consolidations exist to give consumers a second chance at making the right decisions. If you handled your finances in a cavalier or unwise way, all hope is not lost. Debt consolidation assistance can have you paying less, owing only one agency and avoiding bankruptcy today. By negotiating for lower balances, avoiding the high interest rates of most lenders and satisfying your existing creditors right away, your life will change for the better. Learn more and get back on the right path today!