Monday, November 27, 2006

True Facts About Debt Consolidation !

Debt Consolidation can really solve debt problems provided that certain variables allow it. Not all debt can be consolidated and some debt, though it can actually be consolidated, is sometimes best to be left alone. Here are some true facts about the debt consolidation process.

Debt Reduction Is Not Always 65% or More

It is true that some people can achieve a debt reduction of up to 65% or even more. However, those who can achieve such results are in terrible debt problems and have been already charged abusive punitive fees and exorbitant interest rates for their debt. The debt negotiators can reduce interest rates, and eliminate debt generated by missed payments and late payments in the form of fees and extra costs. That’s the reason why someone in such situations can get a debt reduction of up to 65%.

In common situations a debt reduction can range between 15% to 40% and sometimes even less. Moreover, is certain situations, debt may even grow. This is due to the fact that sometimes the solution for debtors is not a debt reduction but a reduction of the amount of the monthly payments and this is done by spreading the debt over longer repayment programs thus generating more (but affordable) debt.

Your Credit Score May Suffer

Your credit score won’t be affected if the debt consolidation agency has agreements with creditors and they don’t inform that you’ve entered a debt consolidation program. Otherwise, your credit score will drop considerably. Nevertheless, within a short time and due to the results of debt negotiation your credit score will begin to rise consistently.

If your debt problems are solved by using a debt consolidation loan, your credit score will also drop. However, since your debt exposure will also drop, over the time your credit score will continually increase as long as the loan’s monthly payments are always on time. That being said, debt consolidation almost always reduces your credit score for a short period of time till debt negotiations end and you start repaying your debt.

There Are Many Scams Out There

You need to be especially careful with unscrupulous companies that claim to be debt consolidation agencies and won’t do anything but take your money. If the agency states that they will make payments on your behalf, make sure to claim the receipts for those payments. Remember that missing payments and paying late will affect your credit score. Thus, these scams cannot only cost you money, but they can also destroy your credit score ruining your ability to get finance for many years.
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Kate Ross is a professional consultant with fifteen years in the financial field. She helps people in the process of securing personal loans, mortgage, refinance or consolidation loans and prevents consumers from falling into financial scams. Smart tips and interesting articles on this subject and other financial related topics can be found at her website: http://www.speedybadcreditloans.com
Article Source: http://EzineArticles.com/?expert=Kate_Ross

How To Use A Debt Consolidation Loan To Dig Yourself Out Of A Financial Hole

If your expenses in life have been adding up, and have put you in debt, it can be a very worrying situation. You have creditors calling you wanting to know when you’ll pay them, you aren’t earning enough to pay off your debt, and you are constantly worried about your financial future.
It can be a very scary situation, which most people make worse by piling lots of debt onto credit cards but only paying off the minimum payments.

But let’s cut to the chase. You know you’re in debt. You don’t want a lecture, you want a way out. So this is what I’m going to help you with.

One of the most popular ways of getting out of debt is to take out a debt consolidation loan. This is basically a loan you can get from many financial institutions, where they roll all your debt into one monthly payment.

There are many benefits to this. Firstly, the interest rates will be lower compared to the interest rates of your credit card. Secondly, it will stop all the creditors from hassling you for their money. And finally, it will make your financial pressures much lighter, as you only have to worry about one payment each month that you should be able to afford.

When you take out a debt consolidation loan, the company you work with can help take a lot of financial strain out of your life. Even if you have multiple debts, ranging from credit cards, car loans, medical bills, education loans, whatever debt you have can be all conveniently put into one monthly payment.

As enticing as this sounds, its important to realise that your debt isn’t gone. It’s just arranged differently. You will be able to afford the payments (and you’ll save some money due to the lower interest rates) but you’ll have to pay off the loan over a longer period of time.

Debt consolidation loans can be a big help to you if you’re in a real financial mess. The only major downside is that it doesn’t change your spending habits for you.

So when you have some space left on your credit card, you may be tempted to start spending again. You may think you won’t, but it can be a very hard habit to break
The easiest way of overcoming this, is to only keep one credit card with you… and use it only for emergencies.

Mark Barclay is the owner of the Debt Consolidation Blog, where you can find lots more useful and free debt consolidation loan advice and help. If you are in debt or you're thinking about debt consolidation, be sure to visit Mark's blog right now.

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