Having too many debts to worry about and pay for at the same time? Well, you’re not the only one, in fact, it seems that it’s a plague of a sort in modern world, especially america where most of the things are paid for and bought via a credit card. Home loan, car loan, student loan, tax payments and so on – it’s tons of material for one person to keep track of and sometimes it’s simply impossible for you to make all of your payments of time, and not just for the lack of money, but because it takes some serious management skills just to know when and how much you have to pay for.
Well, there is a way out of a situation like that, especially if you’re starting to fall behind on your payments, and that’s a process called “Debt Consolidation”. Debt consolidation is having all of your loans and debts (especially unsecured ones) merged into a single monthly payment instead of having multiple payments each month. You submit that single payment to the Consolidation Company that you handed your case to, and they will distribute the money across your creditors. Just what do you stand to gain from this? Well, for starters, a good consolidation agency can get rid of most if not all of the interest on your debt that have piled up, fees for being late and so on, they have the power to negotiate with the creditors and make sure that you get better deal then what you have at the moment, especially if you’re starting to heavily lag behind on your payments. The creditors themselves take a bit of a loss for assurance that you will, in fact, keep paying back the debt, a deal where every side gets something.
That’s not to say that you should think about debt consolidation only if you are in financial problems. Even if you are just paying your regular monthly fees, insurance, tax and so on and you’re not lagging behind, a debt consolidation agency can make your life easier by taking care of how much and when on themselves. In fact, if you’ve got a loan that you will be paying for over 10 years and have the means to pay for it in 6 years, a debt consolidation agency will take it upon itself to service that debt over the longer period of time if you pay them that value over the short period of time.
Debt consolidation loans are also getting more and more popular as means of paying back all of the debts as the same time and having much lower pre requirements at start of the loan, but it does wreck havoc on your credit rating and if you fall back to that last line of defense and you still don’t manage to pull through, then there are no more steps besides bankruptcy, so make sure you can actually service that consolidation debt, especially if you took it against a home value or against a car because you have very high chances of losing your home if you start missing payments again.