Archive for June 10th, 2010

National Debt Consolidation Companies Offer Reprieve to Debtors

Thursday, June 10th, 2010

You can get help from national debt consolidation firms, which offer long-term loans. You pay away all your existing debts. That is, the consolidator pays all your creditors. You then start making regular monthly payments towards a single loan. This monthly payment is usually less than the total amount you spend every month on repayment of your debts.

National debt consolidation offers are there in your mailbox, newspaper ads and all over the internet. These only confuse people. The increased choices don’t make life any easier. It actually makes it harder to pick one loan consolidator from the matrix. However, it is a good thing that you have such a wide variety of choice.

Don’t Think Loan Consolidation Is Easy

Although they are advertised everywhere, national debt consolidation is not easy to get. This is because all lenders will look into your credit score. By the time you start looking for debt consolidation, your credit score is already down. This is because, most people will think about consolidation only after a few missed payments. It is normal to miss payments. However, missing payments is not conductive to your financial health.

You May Pay More

If you don’t make careful calculations, you will end up paying more. Most people are lured by the attraction of low monthly payments. However, the loan term is also longer. You end up paying more. This happens even if you get lower interest rates. Over time, you pay more money as interest.

Make Your Own Firewood

Thus, keep in mind that debt consolidation is not always what you think it is. National debt consolidation can still work in your favor. All you need is ability to crunch numbers. Calculate the total amount you owe and the amount you would repay through loan consolidation. Calculate the numbers. Go beyond the APR and EMI. This will give you an accurate idea.

If you find advantages in the long term, you can go for debt consolidation.

What Different Options Are Available

If you are on the verge of bankruptcy, you first need to get support from your financial counselor. It is a good idea to get help, even if you are not facing bankruptcy. Your counselor can assess the total amount you owe and your potential of repaying your debts.

He/she can then talk with your creditors for terms, which are more favorable for you. You will then make a monthly payment to the counselor, from where your creditors are paid.

Another option is to go to a lender, who would repay all your creditors in one go. This option requires you to put your home or property as collateral. All the high interest loans are paid off. You can then repay the consolidator.

Make plans to make the right decisions. If you do, national debt consolidation can work to your advantage.

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What Is Your Preferred Way To Write Off Debts: Debt Consolidation Or Bankruptcy?

Thursday, June 10th, 2010

There is always an ongoing debate as to which approach is better at tackling the accumulated debts: debt consolidation or declaration of bankruptcy? Though both have their own advantages and disadvantages, it primarily depends on the person’s choice. Still, working rationally, let us examine their respective merits and demerits.

Debt consolidation will save you from the stigma of bankruptcy. It is best used when one really cares for his social reputation and at the same time, has the capacity to squeeze out money for loan repayment, albeit with some difficulty. It will be easy for you to make payment once a month and let all the documentation, negotiations and communication with the creditors being done by the debt consolidation company. On your part, you might have to follow a tight financial planning schedule. The will be restrictions on the use of credit cards and taking of further loans. However, the downside of this choice is that you still have to make monthly payment from your incomes, though of lesser amounts. Further, the debt consolidation services are offered only for the unsecured loans, like the payday loans and not for the secured loans like home mortgages, auto loans, etc. So, you might still be required to pay separately for them.

Bankruptcy, on the other hand, can provide you respite from all your debt woes in one go. That’s its biggest advantage. It allows you get the creditors off your shoulders and make a fresh beginning. If you are really fed up with the debts and have learnt your lessons hard way, then you might decide to put an end to the misery once and for all. However, the new bankruptcy provisions do not encourage filing under Chapter 7 code till some debts have already been paid, mandatory counseling has been done and other options exhausted. Further, you will have to bear the stigma for a long time to come. The lenders may not be willing to lend you easily after that. You shall be mentally prepared to face the same.

So, you shall make a well considered choice between debt consolidation and bankruptcy to manage your debts. Bankruptcy can provide relief on a personal level though it has a bearing on social and future business or work prospects. Debt consolidation will require continued financial discipline and committed loan repayments. It can remain confidential and may not affect the credit scores as badly as bankruptcy.

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