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Consolidate Debt
Ways to Consolidate Debt
Ways to consolidate debt:
Credit Card Transfers
Home Equity Loans
Retirement funds
Life Insurance whole life
Family and Friends
Credit Unions
Non-profit consumer counseling agency
Renegotiate with the primary lender
Borrowing for Debt Consolidation
Advantages:
One can eliminate multiple debt payments
Elimination of Debt collection actions
May not negatively impact credit rating
Might help improve credit rating
Disadvantages:
One has qualify for loan or mortgage
If unable to maintain payments, may lose the property
Debt is not eliminated but only restructured
May create false sense of security
Easier to get overextended again
Debt Consolidation Services & Consumer Credit Counseling
Advantages:
Decease in monthly payments in most cases
Reduction in Debt collection actions
May eliminate some interest and fees
Helps in financial discipline
Disadvantages:
Unable to use credit under consolidation
Must meet qualified unsecured debt minimums
Only works with unsecured debt
Some unsecured debts may not qualify
Possible negative impact on credit rating
Making the Choice
Which is the right choice to make to consolidate all debts? Pooling all debts
into one basket makes sense when interest rates are low. But one taken a loan to
consolidate debts, discipline in spending is a must. Which type of loan to be
taken depends on ones own financial situation and other factors like attitude,
lifestyle etc.
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