Debt Consolidation Basis
Surely there is not much discussion as to what the term "debt" refers to.
Still, the term "consolidation" may present some obstacles that can be easily dodged.
Consolidation implies the combination, uniting or joining of two or more entities.
When it comes to debt, consolidation implies consequently the combination of two or more debts.
There is probably one exemption to this rule: Federal student loans are said to be consolidated when the variable interest rate is locked and changed to a fixed rate.
However, the term is used to differentiate between such procedure and refinancing which consists not on locking the rate but on getting a new loan with different terms (including the rate).
We have repeatedly said that debt consolidation can be achieved by different means.
That's why debt consolidation is the genre for debt consolidation loans which are therefore a type of debt consolidation.
Agents Debt consolidation agents or agencies are people with expertise on the financial field that take charge of people's debts and negotiate with lenders in order to obtain better terms.
The final purpose of this process is still the combination of the different debts.
This consolidation agents will provide that result either by taking care of the different debt payments in exchange of a unified fee or by finally providing a debt consolidation loan of some kind to cancel all remaining debt.
The monthly payments of the new consolidation loan are the equivalent to the fee.
Thus, there is little practical difference.
Yet, there is a huge legal difference because with a debt consolidation loan, the new lender is the sole creditor of the debtor.
Debt consolidation implies many different practices and varies according to the needs of the applicant and the state of the debt.
It's not the same to solve debt problems when debt is handled by a collection agency than when it remains with the original creditor.
However, good consolidation agencies have legal advisors too that can handle debt under more complex situations like court processes.
What Can be Achieved With Debt Consolidation By means of debt consolidation debt can be reduced by up to 60% and sometimes even more.
Of course, this depends on the kind of debt that needs to be consolidated.
Credit card debt is usually the easiest type and the one that provides best results while debt that is secured (like home equity loans and home mortgage loans) is harder to negotiate and needs other financial tools like refinancing or consolidation loans.
Finally, no debt consolidation process is complete if the applicant doesn't modify the spending and borrowing habits that led him to debt accumulation.
Some money management skills need to be developed by the applicant in order to avoid future debt problems.
Thus, remember: mere debt consolidation is not enough if you are going to repeat the same mistakes that forced you to consolidate your debt and some agencies can provide you with these skills as they offer credit counseling too.
Still, the term "consolidation" may present some obstacles that can be easily dodged.
Consolidation implies the combination, uniting or joining of two or more entities.
When it comes to debt, consolidation implies consequently the combination of two or more debts.
There is probably one exemption to this rule: Federal student loans are said to be consolidated when the variable interest rate is locked and changed to a fixed rate.
However, the term is used to differentiate between such procedure and refinancing which consists not on locking the rate but on getting a new loan with different terms (including the rate).
We have repeatedly said that debt consolidation can be achieved by different means.
That's why debt consolidation is the genre for debt consolidation loans which are therefore a type of debt consolidation.
Agents Debt consolidation agents or agencies are people with expertise on the financial field that take charge of people's debts and negotiate with lenders in order to obtain better terms.
The final purpose of this process is still the combination of the different debts.
This consolidation agents will provide that result either by taking care of the different debt payments in exchange of a unified fee or by finally providing a debt consolidation loan of some kind to cancel all remaining debt.
The monthly payments of the new consolidation loan are the equivalent to the fee.
Thus, there is little practical difference.
Yet, there is a huge legal difference because with a debt consolidation loan, the new lender is the sole creditor of the debtor.
Debt consolidation implies many different practices and varies according to the needs of the applicant and the state of the debt.
It's not the same to solve debt problems when debt is handled by a collection agency than when it remains with the original creditor.
However, good consolidation agencies have legal advisors too that can handle debt under more complex situations like court processes.
What Can be Achieved With Debt Consolidation By means of debt consolidation debt can be reduced by up to 60% and sometimes even more.
Of course, this depends on the kind of debt that needs to be consolidated.
Credit card debt is usually the easiest type and the one that provides best results while debt that is secured (like home equity loans and home mortgage loans) is harder to negotiate and needs other financial tools like refinancing or consolidation loans.
Finally, no debt consolidation process is complete if the applicant doesn't modify the spending and borrowing habits that led him to debt accumulation.
Some money management skills need to be developed by the applicant in order to avoid future debt problems.
Thus, remember: mere debt consolidation is not enough if you are going to repeat the same mistakes that forced you to consolidate your debt and some agencies can provide you with these skills as they offer credit counseling too.
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