What is Debt Consolidation?
In debt consolidation, you consolidate all your debts and make just one payment every month towards the consolidated debt. In the process, you hope to lower your monthly payments and the interest on your loan. Since only one payment is due from you every month, it is unlikely that you will forget to pay.
Sources for Debt Consolidation Loans
ü A secured debt consolidation loan can be sourced from home equity loans. A home equity loan carries a lower rate of interest since you
offer some asset as collateral. A cheaper secured debt consolidation loan is difficult to come by.
ü Another popular route to access debt consolidation loan is filing for bankruptcy. This should be the last resort. Once you file for bankruptcy, you will find it very difficult to set right your credit in future.
ü If you can convince a company to issue a credit card to you, debt consolidation becomes easier. The company may insist on a cosigner since you are already loaded with debt. If you can find a cosigner, it is easier to convince the credit card issuer.
ü A second mortgage on your home also serves the purpose. Many take this route to obtain debt consolidation loan. But this is a risky route to take—if you do not repay the debt promptly, you may end up losing your home. Many have. The better option for this would be to sell the home. It is better than the bank taking it over when you default on the loan.
ü You can approach debt consolidation companies. They negotiate with your creditors on your behalf. They help you clear your debt through monthly payments. But debt consolidation companies will be of use only in case of unsecured debts.
ü Bad credit loans are loans given to those with a bad credit history. Not all lenders give bad credit loans.
ü Bad credit consolidation loan may not be appropriate if you have bad credit.
ü Bad credit loans require either a higher interest rate or additional security.
Top Ten Sources for Debt Consolidation
The first choice for debt consolidation should be your bank. If the bank’s terms are not good enough for you, you can try the following sources for debt consolidation:
- Federal Credit Union
- Consumer Credit Counseling Service
- Amalgamated Credit Counselors
- American Debt Consolidation
- Consolidated Client Services
- Credit Solutions of America
- Debt Management Credit Counseling Corp
- Debt Guru.com
- FH Financial Services
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