The Fine Print of Debt Consolidation

June 23, 2012 by  Filed under: Debt 

The term ‘Debt Consolidation’ is often bandied around in the media as being the Saviour of all debt problems. This may be so for some, but it can also be the start of a downward spiral towards impending Individual Voluntary Arrangement (IVA) or bankruptcy. In its simplest terms, debt consolidation is about grouping all of your existing debts into one.

It’s important, when considering debt consolidation to examine whether this really is the right route for you and to read the fine print!

Debt consolidation can be suitable for those:

· Who are struggling to keep up with multiple creditors and multiple bills every month;

· Who are struggling with the level of their debt and need help to reduce it;

· Who have a moderate or poor credit rating;

· Who want help to gain control over their finances;

· Who have an income or a property against which the debt can be secured

Depending on these factors and the amount that you need to consolidate, you may be able to handle the consolidation of your creditors without much difficulty yourself by taking out a bank loan to pay off all other loans. In many cases, this can be the perfect solution to an impending crisis as you will benefit from competitive interest rates and one, manageable monthly payment.

The more complex your case or the more debt you have compared to your income, you may need help in setting up a payment system that is individual to your needs and that is where specialist debt consolidation companies can provide a sensible answer to debt problems.

Essentially, these companies buy your debts or manage them for you and charge you for the pleasure of doing so. How much you pay will depend on who you sign up with and the terms and conditions of the contract that you agree to. They will deal with your existing creditors and ensure that your debts are taken care of. They may even arrange for you to reduce your monthly payment by extending the repayment term. There is something also to be said for the transference of stress that an arrangement like this can have.

As with many financial decisions, there are always companies out there willing to help. Some are however, more unscrupulous than others so it is important to gain advice from a number of specialists BEFORE signing on the dotted line. Be wary of those companies that advertise heavily in the press and on television. An expensive advertising campaign generally means that they make a lot of money out of people like you to pay for it!

The chances are that if you take your eye off the prize, you may end up paying much, much more and for much, much longer so it’s vital that you research all avenues before taking the plunge. The internet can be a great way to do this, but caution is again, advised as it can be a minefield trying to work out who is genuinely offering you free, impartial advice and who is doing so on the back of their very profitable loan company that they are hoping you will sign up with.

Independent advice can be sought from trusted source sat Debt Advice Foundation 0800 043 4050 and the National Debtline http://www.nationaldebtline.co.uk or telephone them for free on 0808 808 4000. They will be able to help you assess your situation and work out a debt consolidation plan that is right for you.

Kevin Walker is an expert in money saving tips. He also runs mymoneycredit.com a site dedicated managing a list of Payday Loan Lenders and other flexible lending solutions.

Article Source:
http://EzineArticles.com/?expert=Kevin_P_Walker

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