- Posted May 22, 2011 at 8:16 am
Having creditors swarming all around you, and incessant calls and mail with reminders and threats of action being taken against you is a difficult situation to face. It also means a poor credit rating that would make it difficult to access credit in future. Fortunately, there is relief in form of debt consolidation.
What happens is that all the money you owe is put together in a single account. The debts are then paid off using a debt consolidation loan, leaving you to pay off this one loan. Some companies will pay off the whole amount for you and you will then be making payment to pay them back.
Other firms may combine all the debt and ensure that all the creditors are paid off every month until what is owed to them is cleared. To be sure of this, bank standing orders will be set up. Apart from now only having one debt, interest rates are lowered and late payment fees are evaded that would have otherwise kept accruing and adding onto existing debt.
Keep in mind that this is a loan so you have to keep repaying the debt consolidation company until you clear their loan as well. You will agree with them what you can pay them monthly until their loan is cleared as well as the other loans.
This may be by giving them all that you can afford to pay off the creditors and them in a specified amount every month or it will go towards clearing off the amount they spent paying off all your loans at once.
You can also have your debt consolidated for a single debt that you are having a hard time keeping up repayments on. People will usually do this for debts of about US $5,000. This will also be with the aim of getting reprieve from creditors and lowering interest and charges levied for delayed payments. There is also the other important advantage of maintaining a good credit standing.
Like other loans, a debt consolidation loan will have to be paid back with interest. Spend time comparing terms including interest loans offered by various companies. You can easily do this on the internet, where you can even get instant quotes and approvals. Choose carefully though so you do not dig yourself in deeper when you were trying to get out.
Everything you need to know and more about debt consolidation in South Africa now in our nifty article on different on debt consolidation options
Source: http://blog.financenewstoday.com/debt-consolidation/tips-and-information-about-debt-consolidation/
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