01 Dec Road To Debt Consolidation
Those facing debt consolidation have a number of options before them that they can take. But extreme caution is advised before taking any of these paths. This is because debt consolidation requires the borrower to take out a load and thins means that any unsecured debt such as credit card debt gets converted into a secured debt. This means that the borrower stands to lose any collateral if the loan defaults.
But if you have chosen to take this road, you should know more about the options before you:-
Credit Card Consolidation
Another method of consolidating debt is to transfer debt from high-interest credit cards to low-interest credit cards. This is a great idea for borrowers who are constantly alert about not missing their payments and keep themselves updated about new credit card offers. But it is vital that they do not run up a new debt on the card and make the situation even worse.
Debt Management Plans
In this plan, credit counselors come up with a customized plan that aims to pay down the debt. It lets the borrower gain control of his or her debt. When successful, a debt management plan offers regular payments and a lower overall interest. It also waives some fees. A debt management plan may take three to five years; the result is good for those wishing to live a debt free life.
Debt Consolidation Companies
A debt consolidation company’s main goal is to reduce the consumer’s debt while paying off creditors. They negotiate with the creditors for lower monthly payments a decrease in the overall debt for which they charge a separate fee and commission. They generally require you to take out a loan that’s secured. While the monthly payments may be lower than the amount paid on individual debts, the overall amount that you will pay will be higher.
There are plenty of other roads that you can take when it comes to debt consolidation. However, each of these paths should be treated with caution as they could lead to further financial problems.