Many people are just beginning to emerge from the economic devastation of the last few years and are looking for ways to rebuild their credit. There are many ways to reduce debt, with credit card consolidation being one of them. When a person wants to consolidate a debt, there are some steps that will make the process easier and faster.
In most cases, debt consolidation will include a full debt credit settlement that will pay off all debts and combine them into one easy-to-pay, structured payment plan. The debt consolidation loan is more easily acquired when there is some type of collateral available to secure the debt. People who have a home or other valuable assets will find that a debt consolidation loan gives them the ability to bring high credit card interest rates down to a reasonable level.
The interest rate for debt consolidation loans varies based on many factors. In most cases, the interest rate on the loan will be between the highest and lowest rates you currently pay on your debts. When a home is used as collateral, the loan will usually also include fees associated with other types of home refinancing, and it will be important to calculate the full loan payment with all fees included.
When a person is unable to obtain a debt consolidation loan, they will often find debt or credit counseling very helpful. Debt counselors know the different options available to pay off debt.
debt consolidation
In some cases, counselors will act as a liaison between the creditor and the debtor and settle below the amount owed. There are two types of agreements negotiated by debt advisors.
Payment settlement requires the debtor to pay the settlement at the time an agreement is reached. The settlement is usually less than half of the total debt owed. When this amount is paid, the creditor forgives the loan balance and it is removed from the debtor’s credit history. This is an option that is often very attractive to people who have received a lump sum of money and have liquid funds available to pay off debts.
Settlement by negotiation
The other type of settlement usually involves negotiation and some type of payment by the debtor. Many deals involve an extension of debt. The debtor may be required to pay the balance due on a loan to have it removed from their negative credit history. In other cases, a loan will be extended and the past due balance will be added to the amount owed on the loan and the debtor will only have to pay the increased interest on the debt.
Credit card debt consolidation usually involves the consolidation of other debts as well. Talking to a professional who is experienced in the many options available related to debt consolidation will be very helpful. When you work with a professional who focuses on restructuring and restoring credit, you’ll be up to date with the latest information on steps you can take to quickly and easily reduce your debt load.