Debt Consolidation- Consolidate Credit Card Debt or Any Unsecured Loan
A country run by debt isn’t what our founding fathers had in mind, yet that is exactly what America has become. Today, it is estimated that 43% of American families spend more than they earn each year. The average credit card debt or any unsecured loan is said to be nearly $8,000 per household.
How did this happen?
With dwindling incomes, skyrocketing living expenses, and being wrongfully encouraged to price stuffs like luxury cars, jeweleries, or clothes instead of what’s so necessary in life (your faith and family)- it’s no wonder we’ve ended up where we are today. While it’s true that sometimes we have no one to blame but ourselves, more often than not, the reason our debt spiraled out of control was because of a job loss, medical bill, or other unexpected event which we had little to no control over. Whatever the reason, it doesn’t matter… instead of dwelling on the past, it’s time to look forward to the future with Debt Consolidation.
So What is Debt Consolidation?
Debt consolidation is a plan of action, which involves taking multiple loans and replacing it into a single loan that has a lower monthly payment and longer repayment duration. A customer will often approach a financial institution for a loan that will cover the amount that is owed to the various creditors or hire a credit counseling to settle his/her debts such as Credit card debt, unsecured loans, IRS debt, utility bill debt, or student loans, ect.
There are three options that the consumer can evaluate and educate themselves in understanding what each process entails when it comes to debt consolidation:
1. Debt consolidation loan: there are two options- a secured and an unsecured debt consolidation loan.
A secured consolidation loan is where the borrower agrees to back the loan with collateral. If the borrower does not maintain the repayments on the loan, the lender has the right to seize his or her home, car etc.
An unsecured debt consolidation loan, the borrower does not need to use collateral to back the loan. The loan is not secured by the borrower’s property, home or car. With an unsecured debt consolidation loan, the borrower will find that the interest rate will be higher and in some instances exceed the rates that the creditors are charging.
2. The second option is taking advantage of using debt counseling or settlement services. These services offer professional help by working with you and your financial situation to come up with the best solution for your personal circumstances. They have the knowledge and the resources to achieve the best outcome of your debt. With years of experience they know which creditors will agree to pay 30 percent of what you owe to other creditors that will expect 70 to 100 percent.
Using debt settlement services they will set up payment plans. The consumer will make monthly payments, so that when the payments reach the minimum of the balance that is needed by the settlement, a representative will negotiate the settlement amount and construct the payment to be paid in full.
3. The third option and a serious one, is bankruptcy. Bankruptcy can give you a new financial start when you feel there is no other way out of enormous debt. Filing bankruptcy is when an individual or business has too many debts that are unmanageable either find a course of action to repay the money that is owed, or to clear and annihilate all debts completely.
Bad Credit Unsecured and Secured Debt Consolidation Loans For People With less than perfect credit, are they real?
Bad credit debt consolidation loans can be a decision that takes much thought. Choosing the right procedure to settle Credit card debt, unsecured loans, IRS debt, utility bill debt, or student loans, does not have to be complex when arming oneself with the right information.
If you are dealing with bad credit, applying for an unsecured bad credit debt consolidation loan with an unfavorable credit score is not always a wise choice. With the state of the economy, the chance of qualifying for a bad credit consolidation loan is not probable. Not only will you find it difficult to find a lender that will give you a loan, but also an unsecured loan to settle your debts comes with a higher interest rate. After all, although there is not always a great chance to get approved for a loan when you have bad credit, there are still few bad credit sites who are trying to give people with bad credit or poor credit a second chance to get the money they are looking for but consumer’s credit score should be at least over 600. Prosper might be one of them. Click the link to learn more about bad credit personal loans at Prosper.
A bad credit debt consolidation loan that is secure is more attainable to the borrower if he or she has sufficient equity. A secure debt consolidation loan is when you use your property and possessions as collateral to back the loan. With a secure debt consolidation loan, the borrower can take out a larger sum of money, but if the borrower defaults on the repayments, then the lender has the right to seize their property.
Debt consolidation loans can be beneficial and also a great way to consolidate credit card debt, unsecured loans, IRS debt, utility bill debt, or student loans, ect. With consolidating these high interest debts, it will give you one payment that is much more manageable. By having just the one payment, it alleviates late fees, and other charges and with it being more manageable, will prevent more bad credit accumulating.
There are some disadvantages of debt consolidation loans. In some cases, the borrower could have a problem finding a better interest rate. If you cannot find a better rate then consolidating your debt wouldn’t be worth it. Also with consolidating your debt, it will take a little longer period of time to pay off your debt. The length of the loan term is longer and you could end up paying more interest in the long run. It is always wise to seek the great, low, and fixed rate from a great lending institution if you are thinking of getting a debt consolidation loan.
Debt Consolidation Loans VS. Debt Counseling
Over all Debt Consolidation Loan or either Debt counseling has its special benefits when comparing to each other. As long as you know which option is best for you to participate with, you will be on the right track to your financial freedom. But if you are dealing with very bad credit, don’t waste your time with debt consolidation loans as no one will approve you any unsecured loan unless you have any possession to deposit. The best option you should be getting is a free debt consultation from a professional debt counselor with high BBB rating and learn how they can assist to lower your debt and create a powerful budget you can afford to pay off your debt faster or try to settle the debt with the creditors yourself.
Debt Counseling VS. Bankruptcy
Debt counseling vs. bankruptcy is two different ways of finding debt relief for your personal finances. It is always smart to know your options to make the right decision for your own personal needs.
Bankruptcy is a legal process that gives debt relief to people that no longer can fill their obligations with debts that they no longer can pay back. If you feel you can no longer make payments on time and you are about to lose property, then bankruptcy might be the answer. Filing bankruptcy can give the debtor a fresh new start but will affect your credit score for many years. It is a serious matter that should be researched before making that decision.
There are some advantages to bankruptcy- the following are a few:
1. It allows you to be rid of heavy debt making your life financially more manageable
2. Stops civil lawsuits, repossessions, and foreclosures until bankruptcy has been completed.
3. You cannot be evicted or your driver’s license suspended during the process of bankruptcy.
4. Bankruptcy can be a better alternative to facing foreclosure. A foreclosure is more detrimental to your credit and for VA or FHA loans may prevent you from qualifying.
Some of the disadvantages of bankruptcy are the following:
1. Your credit score will be affected and have an effect for 10 years.
2. Bankruptcy can be an expensive procedure.
3. When your credit is checked, it will show that you had filed bankruptcy, and impact future career opportunities.
4. It will take many years to build up your credit worthiness.
5. Bankruptcy does not dispel all debt, such as alimony, taxes, child support etc.
On the other hand, Credit Debt counseling or debt settlement is a service to help the consumer become debt free. Many people tend to get confused and think that bankruptcy and debt counseling are equal which they are not. Actually debt counseling can be your own personal financial guide that can help in getting your bills and finances in order without getting debt consolidation loans. A credit counseling would be the best choice when your credit is messed up, and no one is willing to give you the loans.
Debt counseling organizations give you tips on how to manage your money and debts. They also show you how to establish a budget, arm you with educational materials, or possibly hold workshops. The debt counselors that work with these organizations are professionals that are skilled in helping you with your financial situation and to also help you with a personalized plan to solve your financial problems. The debt counselors have the knowledge and kindheartedness to understand your situation and will work with you to solve your debt problems. They will show you skills, to prevent financial problems of occurring in the future.
Debt counseling is a great option when you find that your debt load has become overwhelming, you can’t keep up with the payments and want to pay it off. Debt counseling can be a smarter option then filing bankruptcy. Unfortunately with bankruptcy, it will stay on your credit record for many years. Preferably, an agent from a debt counseling service will work on your behalf with your creditors, to negotiate to consolidate your debts into one monthly payment that is easier for you to manage.
Another advantage of debt counseling is that the harassing phone calls from creditors and collection calls to consumer will be seized. The debt counseling company will take care of this problem, which relieves the stress off of you. If there are any added explanations that need to be re-laid to your creditors all that is needed is a call to your debt counseling company and they will take care of it, saving you numerous phone calls.
There are a few disadvantages of credit counseling or debt settlement is that there are fees involved. All debt counseling, or management companies charge you for their services after you agree to let them be your debt manager, which are usually included in the payments that you make. To save on this, you could negotiate with your creditors on your own, but many people feel intimidated to do so and you could also lose some of the benefits by not dealing with all of your creditors knowingly and professionally.
Debt counseling or debt settlement will give you workable and practical solutions that will be put into action to solve your financial problems. They will look with your financial needs and study them thoroughly to achieve the best solution for your situation.
Want To Get Free Consultation With Professional Debt Counselor?
if you’re not well-to-do with outlining a realistic budget, you may fill out our Free and Short Debt Counseling Form and a professional debt counselor will contact you shortly or Call The Toll-free Number above for immediate help. Discover how a certified and professional credit counselor with high BBB (Better Business Bureau) rating will help you build an objective budget basing on your financial status and lower your credit card debt or any unsecured loan up to 50% or more. Also, this will be a great way to find out if a debt management or debt consolidation program suiting best to your option. Normally, if you contact our debt counselor, they will try to recommend you a powerful debt settlement plan which you can pay off your credit card debt or any unsecured loan sooner without applying for debt consolidation loans.
