Debt consolidation-a suitable option for a debt free life

It has been observed that majority of debtors resort to debt consolidation when they are in financial distress. Debt consolidation program is a far better option than a debt consolidation loan. While debt consolidation program does not require collateral, a debt consolidation loan may require one. The several benefits offered by a debt consolidation program further make it a better option.

Debt consolidation has successfully
helped many people to become debt free. Of all the debt relief options, debt
consolidation has gained wide acceptance among the debtors. This is mainly
because consolidating your debts makes it much easier to handle your finances. Debt
consolidation allows a debtor to merge all debts into one debt account.

Debt consolidation options

Debt consolidation offers two
options. One is a debt consolidation loan and the other is a debt consolidation
program. Majority of the people opt for debt consolidation program as there are
less risks involved in it.

Debt consolidation loans

Debt consolidation loans may be
either secured or unsecured depending on whether the debtor uses collateral or
not. In case of secured loan, majority of the people use their homes as collateral.
In case of unsecured loans, no collateral is required. Instead, the debtor’s
repayment capacity is taken into consideration. In case of secured loan, a
debtor may lose the collateral if he fails to make payments regularly and hence
it is considered risky.

Debt consolidation programs

Debt consolidation program is
recognized as the most reliable option to become debt free. You consolidate all
your debts into one debt account and then pay off your debts as per a new
repayment schedule that has been worked out after negotiating with your

How does debt consolidation work?

You can handle your debts on your
own. You have to talk to the creditors directly and work out a repayment plan
so that you can pay off your debts. However, in majority of the cases it has
been observed those debtors who seek assistance of a professional or a debt
consolidation company was able to get out of debt faster.

If you hire the services of a
debt consolidation company, they negotiate with the creditors on your behalf and
work out a repayment plan for you with reduced interest rate and hence lower
monthly income.

Benefits of debt consolidation

In addition to enjoying a lower
interest rate and lower monthly income, there are several other benefits you
can avail.

How will you find genuine debt consolidation companies?