Whatever the reasons, debt is debt and needs to be consolidated. Debt consolidation is looking for a new debt with lower interest rates to pay off all of your earlier debts. As a result, debt consolidation process makes monthly payments simpler, because you only need to pay one single payment each month.
Not all debts are qualified for debt consolidation. The debts that qualified for consolidation are credit card debt, consumer debt and perhaps public utilities. Student debts have their own debt consolidation process, more over mortgages, mortgages have no debt consolidation. If you are still in doubt, it’s better if you communicate with a company of debt consolidation, there you will be told which debts can be covered.
Even though your debts are possible to be consolidated, you will be reviewed first whether you are qualified or not to get debt consolidation. The review will be done by the company, it is including your credit rating and monthly income. If you have negative credit score, this can impact your qualification for a new debt. This review is to make sure that you are able to pay monthly the new debt as a result of debt consolidation.
If you are qualified for debt consolidation, you might be asked to put your personal property such as car, house or other thing as collateral. For this, you have to make sure that you are able to make monthly payment of the new debt. Otherwise, you will lost your property. Understanding the terms and conditions of the debt consolidation is the most important to do before signing the agreement.
The advantages of debt consolidations are :
- Only have one monthly payment instead of numerous monthly payments (If you have some debts previously).
- A fixed interest rate instead of a fluctuating interest rate that unstable. This will make you to not worry of the increasing next payment since all is fixed.
- Debt consolidation impact only a little of your credit rating.