Consolidation Options for Consumers in Debt

When facing debt, some people immediately think about applying for bankruptcy. But even in extreme debt cases, bankruptcy may not be the best solution. Take a look at the following debt consolidation options and consider the one that’s most appropriate for your situation.


Credit Debt Consolidation Options

Debt Consolidation Loan. A debt consolidation loan is probably the most common type of consolidation option. A borrower can turn to a lending company to take a loan and use the money to pay off all other creditors. In return, the borrower must submit collateral as security for the loan.

Consolidating debts in this manner gives the borrower enough breathing face to focus on debt repayment. There is no need to deal with different lenders and debt collectors. Instead, the borrower must only submit monthly payment to one lender- the debt consolidation company.

By combining debts into a single loan, a borrower can also enjoy a much lower rate of interest although the repayment period is extended to a much longer time. The most important thing to remember when consolidating through a loan is to stay focused on the task at hand, which is debt repayment until the loan has been completely paid off.

[Article: Reasons Why You Should Consolidate Debts]

Home Equity Loan. Just like a debt consolidation loan, a home equity loan is secured by borrower’s home property. The difference between an equity loan and debt consolidation loan is in how the funds are released. With debt consolidation loan, the whole amount of loan is given to the borrower as payment for all existing debts.

Meanwhile, a home equity loan gives the borrower the option to take out money in instalments. The money can be taken out each month and can be used for various purposes such as paying bills or as support for the family.

Balance Transfer Credit Card. For people who are struggling with multiple credit card debt, getting a balance transfer card can be the easy solution. This particular credit card usually offers zero interest rate for a certain period. The introductory period can last from 6 to 12 months, depending on the issuer and during this period, the cardholder can enjoy paying off his/her bills without any interest rate added. However, balance transfer credit cards often require excellent credit in order to be approved.

[Article:  How Debt Consolidation Loans can help Resolve Credit Woes]

Debt Settlement Loan. A debt settlement loan is a loan provided by a lender. However, before granting the loan, the lender will negotiate with creditors on behalf of the borrower to try to reduce the total amount of debt to be paid. Settling debts in this manner can save the borrower as much 75% from his total debts. Nevertheless, consumers should watch out against debt settlement loan lenders who may impose excessive rates and hidden charges putting them back into debt all over again.

Elizabeth Roberts

Elizabeth Roberts

Liz Roberts and her team are continuously providing information to people who are ready to repair their credit and improve their credit score. Also NewHorizon.org team strives to empower the homebased and small business owners by bringing information that can help them to manage and grow their businesses. Let our 24+ years of business finance experience help you to get the financing you need! CONTACT US if need financing for your business.

We will be happy to hear your thoughts

Leave a reply

NHBS Inc © 2024

NewHorizon.org is an independent, advertising supported website. The owner of the site may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website. NewHorizon.org has not reviewed all available credit card offers in the marketplace.

Privacy Policy Terms of Use

NHBS Inc © 2022

NewHorizon.org is an independent, advertising supported website. The owner of the site may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website. NewHorizon.org has not reviewed all available credit card offers in the marketplace.

Privacy Policy Terms of Use

Business Loans

Consumer Loans

New Horizon
Logo
Enable registration in settings - general