How Debt Consolidation Can Help You Examine Your Financial Health

April 12, 2012 by  Filed under: Debt 

Is debt a part of your life? Are you growing increasingly tired of coping with it? If yes, debt consolidation is just what you need to get out of the mess! It can be used to pay off multiple debts by making a single and affordable payment on a monthly basis. It helps significantly in lowering your monthly payments and interest rates. Eventually, it will help you clear all your debts.

A debt consolidation service or program helps you combine your multiple bills that you can’t manage, into a low single monthly payment. Decreasing the cost of delinquent debt repayment by lowering interest rates is the main objective of these programs. There are a few steps involved in such a program. They are as follow:

Financial counseling for nothing!

The first thing debt consolidators do is examine your financial health. You will have to answer various questions that hey ask in order to know about your financial well-being. A computation of the revolving debt on your shoulders will be done. All your bills will have to be looked at for computing the total amount of debt that you are under. Once the consultants/consolidators have enough knowledge about your outstanding payments in total, you will be asked to attend a counseling session. They will offer tips on how to maintain your finances in a more effective and better way. If you have any questions regarding consolidating debts, you can ask the consultant and he/she will answer them to the best of your satisfaction.

Signing a written agreement

If you’re sure about consolidating debts, you can request the consultant to send you the written agreement. It is absolutely important to read all the clauses in the agreement before signing it. Any questions regarding services or fees must be asked, and your doubts must be clarified before signing the agreement.

Attending to collection calls

After signing the agreement, you will have to inform your current creditors that you’ve signed up for a consolidation program. Going forwards, all calls made by your creditors will be transferred to the company that is consolidating your debts.

Payment plan

The consolidators prepare a plan of payment and forward it to your creditors. This plan will be based on your financial wellness. The consolidators use their negotiation skills and convince your creditors to lower the rates of interest and discard late fees on the debts that are still unsecured.

Making payments

The plan suggested by your consolidators will be reviewed by your creditors. If they accept it, you will have to start making monthly payments towards the company. The company will then pay off your creditors based on each one’s individual share. All you need to do is make your payments in time and the consolidation company will handle everything else.

Re-evaluating your financial wellness

It is common for your financial wellness to differ from time to time. If it’s deteriorating, you must update the consolidators about it. They will negotiate with the creditors and help in arranging a payment plan that’s more suitable to your current financial position. All in all, debt consolidation is the best way to get rid of any debts you may have!

For more information on Debt Consolidation and Second Mortgage, contact a mortgage specialist at Home Base Mortgages, Toronto, Canada. 

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