Debt consolidation does not get rid of existing debt.  Most often it is credit cards, retail credit, student debts and car loans that end up being consolidated.  People use debt consolidation to roll their smaller payments into one large payment or they extend the life off the loan to bring their payments down.  The most practical type of debt consolidation rolls existing debts into a home mortgage or he-lock loan on your house.  In a sense, you are just borrowing money from one lender to pay off another. The main purpose of debt consolidation is to lower your monthly payments.  It is important to note that even at a lower interest rate, you may still be paying more interest on the life of the loan if the loan is for a lot longer period of time.

Be ware of people who tell you that you can settle your debts for a fraction of what you owe.  If you are not already behind on payments this will often only work by ruining your credit .  If you are behind, you can probably settle a lot of this debt yourself with out paying a 3rd party their commission.  If you own assets or have an income there is nothing to stop the credit card companies for suing you after the settlement for the amount you originally owed.   Another thing to avoid is brokers trying to consolidate your debt into an adjustable rate mortgages with a balloon payment due in 1, 3, or 5 years.  Brokers can make a hefty kickback on these loans because the true payment amounts can be masked behind the arm. 

Debt consolidation is a serious step.

At best it is only a temporary fix to a bigger problem.  You should find out as much as you can about debt consolidation before proceeding. 

Related Free Debt Articles

When Is It Time For Debt Consolidation?

How do you know when it’s time for debt consolidation assistance? Basically, whenever you feel like you’re in over your head, it’s time to consider options. If it’s tough to make those monthly payments and you’re considering refinancing your mortgage or taking out another debt to pay this one, now’s the time to make the call.

Debt makes you feel alone in the world, but actually you don’t have to handle it all by yourself. Debt consolidation assistance specialists make it their business to help relieve the burden of your financial troubles.

]]>

Get Out Of Debt Free!

Before you start calling the guys you see on TV who tell you they can help, talk to a non-profit credit counseling organization. These organizations are in every town, and you can find them by doing an Internet search in your area. They can offer you financial assistance and advice, as well as help you negotiate with your creditors for lower monthly payments and alternative payment options.

The great advantage of using a non-profit for your debt consolidation assistance is that they have no interest in making a buck. They’re simply trying to help rid the world of its nasty debts. What they have to offer is expertise in handling debt problems.

Beware Of Fake Non-Profits

Unfortunately, nearly every single for-profit debt consolidation assistance company advertises itself as “non-profit.” This lures unsuspecting and desperate (and broke!) debtors into their hands. The next thing you know, they’re asking for outrageous service fees that are nearly as much as your monthly payments!

It’s not easy to tell who is legit and who isn’t. One good way to figure it out is to look at fees. Not all non-profits will help you for free. Some charge a small fee. The keyword here is SMALL. If anybody charges you lots of money, or if they’re vague about how their payment system works, skip them and go on to somebody else. The path to debt relief is full of treachery!

Whatever you decide to do, remember that you’re not alone. You don’t have to handle your debt problems all by yourself. Debt consolidation assistance can help you start digging yourself out of the hole today.

Natural Disasters, Credit Card Providers And Losing Everything

In the case of natural disasters, a person or an entire family can lose everything, their home, possessions (Such as furniture, televisions, and computers, any for of household item.), irreplaceable items (Such as photos, family heirlooms, sporting memorabilia etc.) and, if they are really unlucky, their business. This situation is not their fault and they may not deserve it, however they have to deal with the consequences beyond just losing everything. Many people don’t have adequate insurance to cover the costs, and will end up finding it extremely hard to rebuild their lives without any assistance.

Credit card providers aren’t known for their generosity or their caring natures. They are there to make a profit, not to care about your wellbeing. This can make it a lot harder for a person to rebuild their lives, as they are starting from nothing, starting from a position worse off than they ever had before. This can be extremely difficult, and often many of the problems with come from these circumstances are unknown to those outside of the tragedy, and may come as a shock to those involved.

Losing everything means losing everything. Your credit rating is all of a sudden in an extremely dire position. You may have had a home with a mortgage. The home is gone, but the mortgage is still there. You have no way of making an income as your job or business may have been destroyed with the natural disaster, so any debts you have incurred from using your plastic money won’t be able to be repaid any time soon. This means it will sit there, gaining interest and getting worse and worse. By the time you find yourself in a position where you are earning money, your debts may be so great that you never had a chance for a reprieve. It may take years to make the repayments, and quite possibly you will have credit issuers and/or debt collectors coming for you, trying to get more and more money out of you.

You Can Recover And Seek Help

This situation is tough. The natural disaster, be it a flood, bushfire, tornado, hurricane etc may only last a few hours or even a week, but the repercussions can last years and years. You may never fully recover from what has happened.

Thankfully, some banks and financial institutes have seen this, and have put in place products especially for those with their finances on life support. There are quite a few credit providers who offer cards for people in these situations, with terms and conditions that are designed to make the situation a little easier (And make some profit along the way, of course.). If you feel that you need some extra assistance, then do some research on to what offers are available and who is offering them.