A loan granted to a borrower for paying off the existing loans and debts to credit card over arrears etc is debt consolidation. By choosing a debt consolidation loan when trapped with debt burden, as a borrower you get many advantages since it proves to be a real bonus with more benefits. Debt consolidation loans help you to overcome your financial crisis by allowing you to start by paying your debts afresh and also maintaining your debt burden successfully.

Debt consolidation loans are offered with lower interest rates when compared with your existing loan interest rates. These loans will entitle payment to multiple lenders who charge you high rates of interest for your various debts such as credit card bills, store bills etc. You can take the advantage of availing of debt consolidation, as you will be satisfying your existing lenders by taking a bigger loan with less rate of interest.

A debt consolidation loan can be a secured or an unsecured one. Secured debt consolidation requires you to provide collateral, usually your house. As the lender is satisfied with the guarantee of repayment he offers you debt consolidation loan with a long repayment period and also at lower interest rates. The amount of your loan depends on the collateral’s equity value. An unsecured debt consolidation loan does not need any collateral, it is offered at a relatively higher interest rate. The interest rate depends on your financial position and credit score. Since the providers are many you will get the loan at a competitive rate.

In simple terms, merging of all you debts together is debt consolidation. There are various methods to merge your debts like debt consolidation loan, debt counseling, debt consolidation mortgage and debt consolidation re-mortgage. It provides you an opportunity to combine all your existing loans into a single manageable loan. Debt consolidation program offers you an opportunity for paying off all your outstanding bills and existing multiple loans with one easy installment. It is also a cheap debt resolution option for you.

By taking debt consolidation loan your debt amount does not gets reduced, only the rate of interest is reduced. Many credit unions and banks offer debt consolidation. Debt consolidation loans can be used for any purpose since there is no necessity to specify the reason while applying for the loan. When you have a bad credit history debt consolidation loan gives you a chance to restore your credit status. When you have chosen a debt consolidation loan a single creditor will deal with all your debts. When your debt goes beyond your control, you can take an excellent move of debt consolidation. It is always considered as a great tool of debt management and this loan works by itself for you.

Debt consolidation loans are offered to all and anybody can qualify for availing debt consolidation services. If you have had bankruptcy experience in the past or if you are with bad credit history, you can apply without any hesitation for a debt consolidation quote. The application cost is free and you have to carefully select the suitable debt consolidation service. The debt consolidation limit varies between companies and no such limit is fixed. Generally, you can avail of 125 percent of your property’s value. The debt consolidation loan tenure is decided after verification of your financial condition. The maximum limit for secured loan is 25 years and for unsecured loan is 10 years.



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If you are burdened with credit card debt then you should go in for credit card debt consolidation. If you have just received yet another credit card bill and there are already bills of other credit cards lying unpaid, then you are not alone. This scenario is played out in many American homes today and many of us are weighed down with increasing this debt. Typically, one acquires a credit card to be able to meet emergency payments, without having to carry loads of cash in their pockets and to facilitate shopping. But over a period of time, people do not realize how much they have spent using their credit card (one or more) and the actual purpose of getting the credit card in the first place is lost. Sooner than later, there are more than multiple credit cards in the wallet, and receiving outstanding bill statements becomes the norm.

What To Do

In such a situation, one should go in for consolidation of card debt. Credit card debt help is provided by agencies and firms that offer guidance on how to manage your outstanding debt and offer you a loan for consolidation of cards.

Credit card debt consolidation loan refers to the repackaging of all your outstanding credit card payments, into one single payment. Therefore, if you are receiving three card bills in a month, the debt consolidation company makes the payments of these bills on your behalf and finances you a loan, so that you have to pay to the consolidation company only.

They also offer counseling services, which is known as credit card debt counseling. It involves seeking the services of a credit card debt counselor who will work with you and get you the optimum credit card debt consolidation plan. They help you with reorganizing your debts and finances. With their help, one can have a positive outlook by developing dependable buying and consumption behavior. One of the things most credit card debt counselors advocate is, going in for an appropriate debt loan.

Why Go For Consolidation Loan?

For starters, one is saved from the hassle of making multiple payments to different credit card companies. Also, the credit card debt consolidation company speaks to the various credit card companies on your behalf and renegotiates the terms and interest rates on your outstanding payments. You can go in for an unsecured loan to refinance your credit card outstanding payments or back your loan using collaterals. Loans offered on homes are usually given on the best interest rates that are favorable for the debtor. However, going in for loans for debt consolidation also involves having to give up all your credit cards to the credit card debt consolidation company.



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There are many debt consolidation companies out there offering to help, but it is only Christian debt consolidation companies that are staffed by professionals who appreciate your Christian convictions.

If you find yourself struggling trying to pay off debts only to find that high fees and interest rates make it seem almost impossible, it may be worth your while to get help from one of the leading Christian debt consolidation companies.

Like most debt consolidation companies, Christian debt consolidation programs offered by debt companies are aimed at freeing you from the burdens of debt.

But, unlike the others, the services they offer come with a catch. But here is the catch: The services they provide are focused mainly on spiritual concerns.

As mentioned above, their programs are designed, keeping in view the specific needs of the Christian clients, the companies involved in such programs focus mainly on the spiritual concerns of their client.

Christians are the majority of the people approaching Christian debt consolidation companies for help in their financial problems.

Christians, particularly, usually consider the Christian debt consolidation company to be the obvious choice for them as they see them as the most ethical option as they hope to combine the problems regarding their debts with their religion.

Once you have chosen the company you wish to work with, the company will usually send one of their consolidators to you. However, when applying for a loan, you will find that the debt company’s consolidators may visit you to get an assessment of your financial position.

An important consideration when searching for the right company is how much time they will devote to you and your financial needs.

Another important consideration when thinking of working with a Christian debt consolidation company is your own attitude. If you take the time to do a little research into the company you are thinking of using, you will definitely be getting a good deal.

When you approach the company their representatives will also be sent to your creditors like any other debt consolidation companies to lessen your rate of interest along with your remaining amounts.

The program offered by various debt consolidation companies includes everything from debt settlements with the existing creditors, persuading the creditors to reduce the rate of interest and the amount of monthly payment.

Christian debt consolidation companies and your creditors work together to reduce the burden of repayment. Experienced Christian Debt consolidation and credit counselling services have experience working with creditors to ease the burden of repayment.

In recent years, the numbers of companies catering to Christian clients have increased dramatically.

One of the most vital aspects of Christian debt consolidation is the financial counselling you receive.

They are usually run by Christians as they are well aware of the feelings and concerns of Christians.

No matter which company you choose, be sure that you are working with people who understand your needs in regard to both your finances and your faith. There are several ways in which they can assist you in taking back control of your finances.

If your debts were the result of job loss, high medical expenses, or perhaps time off work to care for a family member, your spending is probably already under control, and a debt consolidation loan may in fact be the correct answer to your debt problems.

However, whichever company you choose, it is better to do some background check on the company. Some so called “Christian” Debt Consolidation Services, though legitimate at the first glance, are nothing more than ploys to get customers. Someone who has an eagle eye on the sale process will see that the name of “Christian” here is taken to get people in a state of confidence.

So, before you decide to go to any of these companies, or others, like debt settlement or debt counselling companies, be sure that you know what you are doing, and more importantly, be sure that the company is legitimate. Christian debt consolidation companies believe that the Lord wants us to live an abundant life which becomes increasingly more difficult with increasing debt and that being free from any financial encumbrances is an incredible empowering feeling.

The greatest advantage of these specific debt consolidation services is that everything is done in a way that is consistent with the Christian beliefs and the teachings of Bible. On the other side of the argument are those that say a debt consolidation loan is not morally wrong. Like any other debt consolidation loan, Christian debt consolidation services also include all kinds of debts, whether it is credit card loan or bad credit or student loan or bill related dues.

Have you got several high interest debts such as credit cards or personal loans, if so, using your Home Equity for Debt Consolidation may be a smart option. Whether a Christian can get into debt (‘money or property which one is obligated to pay another’) is being debated within the Christian community. Doing business with the help of a Christian debt consolidation company ensures financial protection and a profitable concern.

“Let every man, every corporation, and especially let every village, town, and city, every county and State, get out of debt and keep out of debt. It is the debtor that is ruined by hard times.” – Hayes, Rutherford Birchard



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Generally, Christians feel uncomfortable if they are in huge debts and also while choosing debt consolidation loans. That’s why Christian debt consolidation services have sprung up and they offer Christians excellent solutions to get rid of their worries associated with several debts. Many debt consolidation companies specially offer Christian debt consolidation services for Christian clients. This is the latest service that promises debt-related solutions suitable for Christian clients.

Christian debt consolidation loans are exclusively designed by keeping Christians’ concerns towards credits and debts. You will be assigned with a credit counselor who analyses your debt and credit records. After reviewing your financial details, the credit counselor will suggest you options for debt consolidation loan that will help you to combine all your debts in a correct manner. The Christian debt consolidation companies also assist the borrower in establishing a repayment schedule. In addition to this, the counselor provides spiritual counseling that will help you to understand the method of avoiding the chance of debts in the future.

A Christian debt consolidation company offers this service, as it is aware that the people will earnestly try to repay the debt in good faith and obligations. That’s why it offers favorable terms to Christian clients. By offering this service the Christian debt Consolidation Company can play safe by offering loan to you. In the recent years many debt consolidation companies has jumped into this service and competitively offer debt consolidation loans for Christian clients.

One of the greatest advantages of Christian debt consolidation service is that everything is done in a consistent way in accordance with the teachings of Bible and Christian belief. The credit counselor through spiritual counseling lets them know of how best they can avoid debts. The company provides all the services in an appropriate manner like consolidating debts, negotiations with multiple creditors, negotiation of interest rate, establishment of repayment schedule etc.

Like all other debt consolidation loans, the Christian debt consolidation service includes all types of debts like credit card loan, student loan, bad credit, bill related dues etc. A Christian debt consolidation loan has significant advantage over the others as it offers easier terms to Christian clients. The terms and conditions for all the loans like credit card debt consolidation, bad credit debt consolidation, debt and bill consolidation, student loan debt consolidation etc are offered specially for Christian clients with a lot of importance to their religious belief and concerns.

Another best part is that most of the Christian debt consolidation companies are non-profit organizations and hence their primary motive is helping their fellow Christians to come out of the burden of heavy debts.

The average interest rate of these companies ranges between 6 percent and 8 percent and enables you to complete the repayment over a period of 3 to 6 years. They also allow you to pay one payment in a month on any day of your choice. Christian debt counseling will be based on Bible approach and the counselor looks for reasons behind the debt like any accident, illness, loss of job etc. that made you freeze repayment. For Christian debtors, the Christian debt consolidation service is an excellent way for solving their various debt problems in good faith.



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Introduction

If you’ve reached a juncture in your life at which you are interested in taking some direct and positive action to better your financial situation, you may be considering obtaining a debt consolidation loan. In this regard, there are a number of different debt consolidation loan options that actually are available to you today, including an unsecured debt consolidation loan. This article has been designed to provide you with a general overview about an unsecured debt consolidation loan.

Once you have considered the information that is provided to you in this article about an unsecured debt consolidation loan, you will be in a better position to determine whether or not an unsecured debt consolidation loan is the most appropriate debt consolidation option available to you today.

A Simple, Consumer Friendly Definition of an Unsecured Debt Consolidation Loan

When it comes to lending related issues, technical definitions abound. Unfortunately, technical definition can be of little assistance to a consumer like you who really is trying to make a decision about the propriety of obtaining an unsecured debt consolidation loan.

In simple terms, an unsecured debt consolidation loan is a loan that is designed to provide you with the financing necessary to consolidate your current debt obligations. The unique feature of an unsecured debt consolidation loan is found in the fact that you are not obliged to come up with collateral for an unsecured debt consolidation loan.

This differs from the other major type of debt consolidation loan that does require collateral, logically known as a secured debt consolidation loan. In order to obtain a secured debt consolidation loan, you have to have some property (most often your home) that can be used as collateral for a secured debt consolidation loan.

Will You Qualify for an Unsecured Debt Consolidation Loan?

In this day and age there actually are different types of unsecured debt consolidation loan options available to you. However, with that said, if you want to obtain the most favorable deal on an unsecured debt consolidation loan, you will need to have a credit history and a credit score that is not in the proverbial danger zone. In other words, in order to obtain the best possible deal on an unsecured debt consolidation loan, you will need to have a fairly sold credit history and a fairly (good, actually) credit score.

As mentioned, when it comes to finding an unsecured debt consolidation loan today, there are a variety of options. This includes unsecured debt consolidation loan options for people with bad credit.

The drawback with bad credit unsecured debt consolidation loan options is found in the fact that there will be serious limitations in the amount of money that you will be able to borrow. Moreover, the interest rates (and perhaps other fees and charges) associated with an unsecured debt consolidation loan for a person with a bad credit history and lower credit score will be significantly higher than what is otherwise available for a person with a better credit standing.



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Easily fits in your pocket but….not in your budget, a small piece of plastic with the power of currency in it…CREDIT CARD. Credit card is the most common currency used for serving various financial purposes without carrying lot of cash. But as we know that excess of anything is not good. This applies here also, as when we spend through credit cards more than our repayment capacity. It creates troubles for us at the end of the month in form of a huge credit card bill. And not paying such bills on time will lead us to bear penalty charges. All this may seems stressing and annoying to you but it’s even worst when it happens with you. For such situations credit card debt management UK is here to avoid you from falling into such situations.

Credit card debt management in UK is about managing your debts related to your credit cards. Credit card debt management UK offers you following services which you can get benefited from:

•Credit card debt management plans

•Credit card debt management services

•Credit card debt consolidation

•Budget planning

•Bankruptcy education

•Credit card debt education

•Credit counseling

In addition to these credit card debt management services in UK there are steps which you can take from your side such as making cash purchases, don’t carry too many credit cards; they will only increase troubles, use of debit cards if you are not comfortable with carrying cash in your pocket, control your expenses, regular savings for bad times to avoid taking debts.

To avail all these benefits you can log on to credit card debt management websites where you can get fill the application form with the required details such as your name, address and contact information, total amount of credit card debts with you, number of credit cards you have, your monthly income, credit statement for reference. The consultants in these credit card debt management agencies in UK are highly professional and you can easily rely on them for handling your financial matters. There is lot of flexibility in working of these agencies. So you can use there services according to your requirements.

The major drawback in using credit cards is that many people in UK overspend and find themselves in the black hole of high interest credit card debt. Credit card debt management UK cater to such people with ease in recovering from and avoiding such debts.



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Is every month like a constant struggle with bills payment piling up? Do you feel like not opening the bills? Are you thinking of ways to avoid it? If answer to any of these questions is ‘yes’ – then you are certainly heading for debt consolidation.

Debt consolidation offers great support to self employed while budgeting and making financial decisions. An individual who operates a business, or a profession as a proprietor, consultant, independent contractor, freelancers or someone in changeable employment – then you are a self employed.

Debt consolidation for self employed was traditionally considered expensive and difficult to obtain. With more than 15% of UK being self employed the perspective has changed. Self employed are a very financially viable class. The cases of self employed debt consolidation have become considerably high.

Does debt consolidation for self employed makes sense?

Certainly! A debt consolidation for self employed is similar to any usual debt consolidation. It consolidates the smaller loans into a single loan. Debt consolidation for self employed you can fuse unsecured loans, utility bills, medical bills, or any other outstanding bills into a single debt consolidation loan. This debt consolidation loans has lesser interest rate and one single monthly payment for all the loans. So instead of paying separately on every loan, you save money by paying on this low interest debt consolidation loan. The monthly payments are usually lower thereby making it possible for self employed to meet their obligation each month.

Debt consolidation for self employed is usually of two kinds – secured or unsecured debt consolidation. Unsecured debt consolidation will serve well for those self employed who can offer no security for their loan amount. Unsecured debt consolidation will have higher interest rates than its secured sibling.

Secured debt consolidation requires security (home, car, real estate etc). With home equity debt consolidation, the security is in the form of home. This brings better rates, lower monthly payments, convenient terms, and approval for bigger amounts. With secured debt consolidation, a self employed must be aware that he can affect the loss of his property in case of non repayment. Though that is the last resort. Self employed can use Debt consolidation for the purpose of recovering credit. When you make payments on time, it reflects in your credit. Since monthly payments are lower with self employed debt consolidation, you are less likely to miss your payment and therefore improve your credit.

How is debt consolidation for self employed different?

Debt consolidation for self employed differs with respect to documentation. A lender looks for steady income as proof of the return of loan. Self employed usually does not have any pay checks to offer and no regular income. And also no third party to verify income. A self employed in order to avoid taxation usually do not declare their complete income. Therefore, self employed debt consolidation depends upon income tax returns. Self employed should be ready to produce income tax returns for two years.

There are lenders who offer debt consolidation to self employed with limited documentation or no documentation. However, this is true to some extent but “no” or “reduced” documentation debt consolidation will be compensated by comparatively higher interest rates.

Is there a threat to debt consolidation for self employed?

The threat is usually in the form of the self employed revisiting old borrowing ways. Getting off debt can stimulate a spendthrift indulgence in a self employed. This can neutralize the whole purpose of debt consolidation. A self employed looking for debt consolidation should understand that debt consolidation is trying to address something – your money spending habits. If one can’t take heed of this reality then they are only leading themselves to further debt condition. A self employed must see to it that no further financial risk are undertaken after debt consolidation.

Debt consolidation for self employed considerably reduces the monthly outgoings. This leaves self employed with free money and scope for improvement of lifestyle. This provides further boost to economic condition. More available income means either more savings for investment in industry and people in jobs. Debt consolidation for self employed is not an innovation in the loan market. However, it can offer innovative answers for your personal debt condition.



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As many loans are offered to everyone today, it is very easy for a borrower to take wrong decisions and become a prey. Borrowing several loans takes one into a severe debt situation and it is a common mistake done by many debtors. You have to take some serious efforts to overcome these debts and the best option is debt consolidation loans. A debt consolidation loan works in a highly practical setup for the borrower’s convenience. You can borrow debt consolidation loans for paying off previous debts to multiple lenders and convert your debt into a single debt and paying a single installment.

A debt consolidation loan provides many advantages that are helpful to you. When compared with your earlier debts, with high rate of interest the debt consolidation loan will be offered at a very less interest rate. By this way you can save a lot of money that you would have been spent as interest for multiple lenders. As a borrower you will be making a single installment payment instead of multiple payments for different lenders. Debt consolidation loan reduces your monthly money outflow and makes it comfortable for you to repay.

Debt consolidation loans are offered to the debtors in two ways. If you don’t wish to pledge collateral as well as want to obtain a debt consolidation loan, then the best way for you is to opt for unsecured debt consolidation loan. If you are ready to pledge collateral so that you can get low interest rates for the debt consolidation loan, then you can choose secured debt consolidation loan.

With credit card dues and many outstanding loans, only debt consolidation loan will save you from going bankrupt. Bad credit score along with bankruptcy will make your life difficult and you cannot obtain any fresh loan. Hence it’s recommended for everybody to avoid bankruptcy. A debt consolidation loan is generally referred to as a safe loan when compared with your existing unsecured personal loans and credit card dues. Therefore you will have advantage by replacing your other loans of high rates of interest with a debt consolidation loan with lower interest rates.

The debt consolidation loan provides you a lot of advantages like:

A single loan facilitates single monthly installment payment and you don’t have to deal with multiple lenders. Debt consolidation loans can be easily managed. The interest rate of debt consolidation loan is comparatively less and the loan is also secured. As the interest rates are low in this loan your monthly installments will be also small. Debt consolidation loan gets you tax benefits for the interest you pay on the loan.

Though you have many advantages by obtaining debt consolidation loan there are also few disadvantages. They are:

Your loan period will be longer than your existing unsecured loans and hence you may have to pay large amount as loan interest. If you pledge collateral for debt consolidation loan, if any default occurs in payment the lender may take possession of your property.

Selecting right debt consolidation loan can solve all your debt woes. For all your current financial problems you can find easy solutions with debt consolidation loan and if the borrower follows proper thought with action in the future, he will avoid becoming a debtor again.



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The fact is, a growing number of people posses more than one credit card, and so, understandably, the credit card industry is growing in leaps and bounds. However, with the growing number of credit cards issued, the industry and holders are faced with a growing problem called ‘Credit Card Debt’

In order to fully comprehend the meaning of ‘credit card debt’, we need to look at the use of credit cards and how easy it is to abuse them.

Credit cards, as the name suggests, are cards on which you can be given credit i.e. make short term borrowings, and the balance you owe to the issuer at any one time is credit card debt. Your credit card is a display of the credit account that you hold with your credit card supplier. Whatever payments you make, or items you purchase using your credit card are your borrowings that contribute towards your credit card debt. Your total credit card debt is the total amount showing as a balance on your monthly statement.

You are obliged to make a payment against all or part of your credit card debt on a monthly basis. Each month you will receive a statement showing itemized details of the transactions where you have used your card to either pay other bills or purchase items. Your statement will also note any payments the credit card issuer has received from you since your last statement, together with a balance which you still owe to the issuer, and a minimum payment that you must make by a certain date, in order to adhere to the rules you agreed to when making your credit card application.

Failure to make the minimum payment by the date shown on your statement will often result in you incurring a late fee as well as the interest charges applicable for that monthly period. The interest charge applied to your account represents a percentage of your balance or credit card debt.

However, paying only the minimum payment is not recommended as you will not be reducing your overall credit card debt by any significant amount. It makes more sense to pay off your credit card in full by the due date which appears on your statement each month. Making a full balance payment means that no interest charges will be added. Whereas failure to pay off your credit card debt will cause it to keep growing, and at a speedy rate because the interest rates on credit card debt are typically higher than the interest rates on other types of loans/borrowings.

Remember also that interest charges added to your credit card debt each month will form the new balance on your statement, or the new credit card debt amount. If you continue to simply make minimum the payment (or no payments at all), the interest charges will be calculated on the new credit card balance. So in effect, you will end up paying interest on the last month’s interest too. Therefore your credit card debt will accumulate rapidly and soon you find that what was once a relatively small balance on your statement has ballooned into a much larger amount which you could find almost impossible to pay. Moreover, if you don’t keep in control of your spending habits, your credit card debt rises even faster. This is how the vicious circle of credit card debt works.

The pressures created by a growing credit card debt are huge, and will often have an adverse effect on your health and your relationships, not to mention your personal creditworthiness, and you do owe it to yourself to treat all three with the utmost respect. When your credit card statement arrives at the end of each month, try to pay off the whole debt. That way your card facility will often cost you zero. Paying just the minimum payment on your credit card is fraught with danger and could cost you dearly.

Trevor Taylor



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Most people facing growing debt and limited resources have probably looked around for financial solutions and heard a little bit about debt consolidation. Debt consolidation is a great financial option to overcome overwhelming debt, but it is not right for everyone. But before you can figure out if it is right for you, you have to realize that some of what you may have thought about debt consolidation … is wrong.

Of all the financial plans available for people dealing with overwhelming debt, debt consolidation is probably the most valuable and the least understood. In fact, you may already believe some of these common myths about debt consolidation. Find out the truth!

Myth #1 Debt consolidation is the same or similar to debt management, debt settlement, and bankruptcy.

Truth Debt consolidation is nothing like those other programs. In truth, it is not so much a “program” (you can even do it on your own, if you know enough) but more of a strategic approach.

In debt consolidation, you lump all of your debts together and repackage them. Debt settlement and debt management typically involve dealing with a company or counselor and the object is to reduce the amount you owe. Bankruptcy is a legal proceeding that involves a date with a judge.

Myth #2 Debt consolidation reduces your debt.

Truth No, it doesn’t. If you owe a total of $80,000 on several credit cards and loans and you consolidate that debt, you still owe $80,000.

Debt consolidation does not re-negotiate, settle, write off, or reduce any of your debt. What possible advantage is re-organizing your debt like that?

If you have a lot of loans at high interest rates, repackaging those higher-interest debts into one larger loan at a lower rate reduces your interest and the amount you have to pay. This means you can either pay less a month or (even better) pay the same amount but get the debt paid off sooner.

Myth #3 Debt consolidation will hurt my credit score.

Truth Done properly, debt consolidation will not impact your credit score or credit report negatively. In fact, debt consolidation may even improve your credit score! That’s because you’ll be paying off a bunch of smaller loans and any time a loan is paid in full, that helps your credit score.

Myth #4 Debt consolidation requires getting help from an outside agency or a lawyer.

Truth While there are companies that specialize in debt consolidation programs, you do not have to use them to consolidate your debt.

Of course, if you want to consolidate your debt on your own, you have to know a bit about how to do it and what the options are. But it can definitely be a do-it-yourself project for people good with money (or who are willing to learn enough to get good with money).

Debt consolidation is also not necessarily visible to outsiders. Your bank, the credit bureau, and other parties may not even be aware that you have consolidated debt.

Myth #5 Debt consolidation is something for financial losers and lightweights, not for people who know how to manage money.

Truth This is the most far-out myth about debt consolidation. Debt consolidation is a principle that is used in business and by the super-wealthy all of the time. It is a way of organizing and structuring your debts in a way that is most advantageous to you.

Myth #6 Debt consolidation is just robbing Peter to pay Paul; you’re just getting more debt!

Truth Debt consolidation is indeed a way for you to pay off one debt by getting another debt. But not all debts are equal.

As an example, let’s say that you owe $10,000 and the loan is set up so that you have to pay 22% interest. For example, let’s suppose that I go to my credit union and work out a deal to borrow $10,000 at 12% interest. While both debts are still in the amount of $10,000, the debt at 12% interest is a better deal for me. I won’t have to pay as much per month or, if I make the biggest payments I can, I can pay it off sooner.

Myth #7 Debt consolidation requires you to be a homeowner.

Truth There is a grain of truth to this, in that owning a home definitely offers an advantage to anyone who wants to consolidate debt. (It doesn’t matter if your home is paid for or not, but you do need some home equity.) However, you can consolidate debt without owning a home, too.

Myth #8 Debt consolidation will make it harder for me to get future loans.

Truth In most cases, it is unlikely that anyone but a forensic accountant could figure out that you consolidated your debt (unless you go through a debt consolidation companythat might leave a paper trail).

If you borrow money in one loan and then take out another, more advantageous loan to pay off the first one, you’re more likely to leave a paper trail of somebody who pays off debt responsibly. It is more likely to make you a desirable creditor.

Myth #9 People who consolidate debt just wind up digging themselves in deeper in debt!

Truth It is absolutely possible to consolidate your debt and then keep spending and get yourself in a big mess. That’s why you need good information and a plan to pay off your existing debt, manage your finances now, and start planning for your financial future.

There is no reason that debt consolidation cannot work to get you out of debt for good, but you have to have a plan.

Myth #10 Debt consolidation will allow me to write off some of my debts and it will stop bill collectors from calling.

Truth Let’s take these one at a time.

Unlike bankruptcy, debt consolidation will not allow you to write off any of your debtnot a penny of it. Whatever you owed as a debt before debt consolidation is the amount you’ll owe after debt consolidation.

The advantage is just that you structure it in a more favorable loan. You do not get existing debts cancelled or decreased! Now it’s true you can work that out in other debt management solutions (debt settlement lets you reduce debt, bankruptcy will let you write some debt off) but they come at a very high price. Both of these approaches will have a negative impact on your credit score, will make it hard for you to get future loans, and stay on your record for quite a while. Bankruptcy, in particular, is an extreme solution that involves an actual court proceeding and a judge who has the authority to make certain decisions about your financial situation (including forcing you to sell some items to pay off debts).

Debt consolidation can only stop bill collectors indirectly. Here’s how: let’s say you have six debts and you’re getting calls all of the time. If you consolidate your six debts into one large debt consolidation loan at more favorable terms, you’ll pay off all of those debts. Bye-bye, bill collectors!

However, if you don’t pay off your new debt consolidaiton loan on time, the bill collectors will start calling again.



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