According to Investopedia an online platform for investors and individual interested in financial education. Debt relief is the reorganization of debt in any shape or form, so as to provide the indebted party with a measure of relief, either fully or partially. It can also be defined as the partial or total forgiveness of debt, or the slowing or stopping of debt growth, owed by individuals, corporations or nations
On the other hand, Debt consolidation is a personal Refinance strategy used in reducing high-interest debts into lower interest debts in other for easy repayment with the objective of being debt free. The purpose of debt consolidation is to aggregate all debt into a single lower interest debt whose payment is spread over sometime for ease of payment.
Many indebted individuals, the small business owner often thinker and ponder whether it is possible to get debt relief by going the debt consolidation way. A lot has been written and postulated about debt consolidation, however, I will in this article highlight ways of getting debt relief through debt consolidation.
Debt consolidation can provide individuals, corporations and small business with substantial debt relief by acquiring a lower interest consolidation loan, which is then used to offset many unsecured loans such as credit card, personal lines of credit, medical debts and departmental store credit cards. The consolidated loan is repaid over a longer period of time which gives the indebted party a huge relief from stress and strain, thus, ensuring that his or her relationship is preserved. A home equity loan can also be used as a consolidation loan to offset other unsecured loans, although, this option puts the property at risk.
The consolidation loan offered by consumer credit counselor can be a major source of debt relief for indebted individuals and small business owners. The consumer credit counseling is an amazing way to consolidate debt because you don’t have to borrow any other money in other to pay your debt but you are only required to contact a non-profit consumer credit counseling agency which will direct you to their debt counselor that will review your financial status and draw a debt management plan in which will give you the freedom from debt. Using the debt management plan provided, you will then no longer need to pay your lenders directly but you make payment to the credit counseling agencies which will then disburse your money to the lenders at a lower charge per month.
Another way in which debt consolidation help the indebted party achieve debt relief is through a balance transfer. For instance suppose an individual owns five credit card at 16%, 17%, 18%, 19% and 20% translating to an average of 18% interest rate. Now imagine getting a new card with an interest of 13%, you’d have lower monthly payments and would save money on interest. A better alternative is to transfer the debt into a consolidated credit card at a 0% interest where you might have as much as 18 months moratorium. This will give you a leeway to easily offset the loan before the moratorium ends.
The foregoing are some of the ways through which an individual, organization or small business owner can obtain debt relief via debt consolidation. A visit to a reputable debt management company will further expatiate the benefit of debt consolidation.