How Debt Consolidation Works

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There are several ways to consolidate a debt and make its repayment simple and seamless. However, in this article,We will focus our attention on two primary ways in which to consolidate your debt:

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  1. Debt can be consolidated by getting a 0% interest balance transfer credit card:

Balance transfer credit card is a system that allows for the transfer of existing your debt/loans from one or more cards into a new card with lower interest charges for examples savvy consumer use this method to consolidate their debt by taking advantage to reduce interest being paid on existing debt into lower interest via the new card.

 

  1. The second primary debt consolidation method involves getting a fixed-rate personal loan:

 

This method of debt consolidation involves a consumer securing a lower interest personal loan and using the loan to repay the unsecured debt while spreading the repayments of the personal loan over a period. It is important to note that the new loan you intend using to offset the previous unsecured loans must be large enough to cover all of the existing loans put together.

THE EXIGENCIES OF DEBT CONSOLIDATION

Before consolidating your debt, It is advisable to carry out some checks in other to get value for your money and effort.  Debt consolidation is not a one size foot all solution Debt consolidation will not necessarily get you out the desired freedom if you are not willing to do the necessary adjustment and self-discipline required going forward.

Debt consolidation should be considered if:

  1. Your total debt is less than 50% of your income.
  2. Your credit rating is good and can qualify for a 0% credit card or low-interest debt consolidation loan.
  3. You have a cash flow that consistently covers a repayment of your debt.

Debt consolidation should be jettisoned and other options should be considered if:

a: If your debt load is small and you can finish repayment in less than six months.

  1. If your total debt is more than 50% of your income thus making it impracticable to finish your payment in 5 years.

 

Debt settlements companies are  organizations that assists individuals/organization to draw up a strategic plan for the consolidation and repayments of their debts.

Debt settlement companies negotiate on behave of debtors, lower interest and some other fees from creditors.

Debt settlement companies are the quintessential negotiator for debtors and they provide a way out of indebtedness. It is always advisable to use these organizations because they offer the best advice.

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