America Debt Consolidation

Advantages of Debt Consolidation

The advantages of consolidating your debt versus negotiating separate agreements with each of your creditors are many. For one, by consolidating your debts, you can reduce your monthly payments. You may also lower your interest rate by up to 50% for each of your non-secure creditors. Since creditors realize that, by participating in a debt consolidation program, you are clearly trying to repay your debt, they are usually willing to negotiate interest rates with your credit counselor. Since your credit consolidation is in the creditor’s best interest, the creditor will go out of their way to accommodate a custom repayment plan. If you were to file for bankruptcy instead, the creditor would receive a much smaller settlement. These two factors (lower interest rates and reduced monthly payments) combined can reduce your debt significantly. When interest rates are reduced, a larger percentage of your payments will go straight towards your principle, so you can pay off your debt sooner.

Additionally, with the intervention of a professional debt counselor, many creditors will agree to lift late and over-the limit penalties. Without a debt consolidation program in place, if you fail to meet monthly minimum payments with multiple creditors, you are subject to finance charges ranging from 6% to as high as 21%! Even if your debt is interest free, if you miss the final deadline for payment in full you can be slapped with hefty interest charges that will date back retroactively to the time you started failing to meet payments, or in the case of a loan, to the time the loan was established. With the aid of debt consolidation, however, you will merely be responsible for a single, fixed, low interest rate.

Another perk of debt consolidation is that you will only have to make a single payment to a single creditor. This will make it much easier for you to keep track of your payment schedule. Likewise, if you’re having additional financial trouble, you will only have to contact one creditor.

Part of the great appeal of the debt consolidation option is that you don’t have to risk any of your assets in the process, as you would in the case of a secured loan. Unlike in the case of filing bankruptcy, debt consolidation keeps you finances private.

Participation in a debt consolidation program can actually reflect well on your credit rating. If you stick to your schedule and make timely payments, you may be able to fix your poor credit and boost your overall credit rating. If you still have good credit, debt consolidation will help you maintain it.

Among its many other advantages, debt consolidation will keep those nagging creditors of your back. That means no more dreaded phone calls or envelops stamped “past due” piling up in your mailbox. Creditors will usually stop contacting you within 30 days of your enrollment in a debt consolidation program. Imagine the relief you’ll feel!

Last but not least, pursuing a debt consolidation will empower you with a tremendous sense of accomplishment. As most of us know, debt can be extremely stressful. We find ourselves panicking in the face of any unexpected costs, like a car or house repair. Once you sign up for a debt consolidation program you can sleep easy, knowing that you’re taking care of the problem. You’ll be moving full speed ahead towards restored financial stability and a life free of debt—the life you’ve always dreamed of.