How Debt Consolidation Can Help You

As more and more countries around the world sink deeper into financial troubles, their citizens have also been going down with them, finding themselves drowning in debt without any real hope of relief or rescue.

As hard as it is for many of us to accept, our financial reality may never return to what it was a couple decades ago. Still, despite this, there are many people who are seeking measures to free themselves from the shackles of debt as they strive for financial freedom.

Whether it is through bankruptcy or debt consolidation, people are recognizing the need to do something, no matter how undesirable the choices are.

Despite its appearance as a cure-all for anyone’s financial troubles, debt consolidation is primarily designed to help those who are underwater in debt with a number of different creditors.

This is due to the unique fact of being able to better manages payments by consolidating all of your debts into one easy monthly payment.

When you are completely drowning in bills, debt consolidation is a lifeline to financial survival.

Depending on how much debt you have and the agreement you were able to obtain, consolidation loans will typically have a time period of a few to several years.

And if you think about it, up to this point, your debt has never all been paid off, even though you’ve been paying on them for years and years, maybe a decade or more.

So really, when you think about the lower interest rate, the single affordable monthly payment, as well as no more juggling due dates and late fees, taking more time to once and for all become debt-free should not be a huge sacrifice.

Though this all may seem a bit complicated, consolidation loans are actually very easy to comprehend. You must locate a credible financial institution offering such consolidation options and inform them of all of the debts you currently hold so that they can negotiate a reasonable debt consolidation arrangement with your creditors.

Your consolidation company will act as your financial representative contacting and corresponding back and forth with your creditors until your debt has been settled, and usually for much less than you actually owe. Now all of your scattered loans are paid off, you now have a new single loan that you will have to make your monthly payments to your debt consolidation company. That’s it.

Just because your monthly bills are down does not mean you should go back to being reckless with your spending. You would best help yourself by making a budget and sticking with it and altogether changing your spending habits, as this will build the financial discipline that will lead to financial independence

32 Replies to “How Debt Consolidation Can Help You”

  1. This article is so helpful, I have some debt that has brought my credit score down and makes it hard to get home loans or sor2e credit cards. But with this process, it shouldn’t take me long to pay it off and be able to have the things I need! Of, course while budgeting!

  2. Debt consolidation seems like a necessity these days. Everybody has some. I know a few people who really boosted monthly cash flow through debt consolidation. But be careful when shopping for debt consolidation services.

  3. Debt consolidation sure is one solution for someone to pay/lighten their debts. And I agree with you, after someone only has one single debt to paid, doesn’t mean that he/she should be reckless. Thanks for your article, I learn something valuable.

  4. This is article is great help. Is hard to keep track of finances and debts can pile up very easily. Specially if you have many things to take care of in your life such as family, work, projects and so on. Dealing with lots of different bills and dates is time consuming and mind exhausting. Debt consolidation is an excellent way to make things simple with the potential advantage of ending up paying even less!
    And will give you time to rethink your finances for the future instead of worrying about those bills.
    In my opinion is a great service and a big relief, and I would totally go for the help of one of this institutions.

  5. Debt consolidation will surely be of great help to people who are little unorganised and casual about their repayment due dates. Managing multiple debts from multiple creditors can be a very intimidating task for some and debt consolidation will surely be of great help in smooth repayments.

  6. Great Article. I know what its like to be in debt, and I definitely agree with the author that creating a budget is the best way to stay out of that mess. All to often we’re tempted to spend recklessly when our credit improves. But that just makes this worse.

  7. That is great advice for anyone who is in debt. I have a lot of student loan debt, would consolidation be an option for me in paying these off? I also have other debts as well though so would they all be able to be consolidated together?

  8. A vast majority of my family’s debt is in medical bills. The idea of collecting the numerous invoices and collection notices into a single payment sounds much more manageable, and I imagine it would help a lot of other people as well. Definitely something to keep in mind. Thanks for sharing the information!

  9. Budgeting was the answer for our family! Unfortunately debt consolidation doesn’t seem to be much help with federal student loans.

    1. Hello Fannie, have you tried checking into a direct consolidation loan? (please check link above under Donna’s comment.)

  10. The one thing that is missing from this article is that if your credit rating is bad the banks will not give you a consolidation loan. For most people who need the consolidation loan since they are behind their credit takes a hit so therefore these loans are hard to come by.If you go through a company that specializes in debt consolidation then the fees do stack up quite a bit and they often add more time on when you are getting close to the time limit first agreed upon. As with all things you have to do your research and take great care in matters that involve your finances.

    1. Great addition Craig. Yes, you don’t have to have perfect credit by any means to qualify for most debt consolidation loans. But overall, lenders will want you to at least have fair credit – which is generally considered a 600 score or higher.

  11. A close friend of mine was over her head in debts. The funny thing is just the fact that she owed to so many different sources made it seem unmanageable. Once she went through a debt consolidation company, it all seemed a bit easier to keep track of. I’ve never been in debt myself, but I can see how it can be a bit psychological as well…

  12. “When you are completely drowning in bills, debt consolidation is a lifeline to financial survival.”
    I cannot stress how much this statement resonates with me – and probably anyone else who is carrying multiple balances.
    Until about three weeks ago, I was making minimum payments ranging between $120 – $200 on four separate loans. I recently learned that after interest and charges, Only about 30-40$ of that was being deducted from the principal. What’s worse, I learned that on two of the loans, the charges actually amounted to slightly more than the minimum monthly payment, meaning I had actually not made any dent at all in the principal – despite spending almost six thousand dollars over the past two years.
    I’ve since taken out a line of credit as a means of consolidating the balances, and for the first time in years I actually have hope that the debt is manageable. Now, instead of making multiple minimum payments, I have a chance to combine those amounts and make a singular payment that is large enough to actually deduct a substantial amount from the principal every month.

  13. When my Aunt started processing necessary papers to go abroad, her debts piled up. Luckily, she found a way to consolidate them. And now, she only has one creditor to worry about and her debts are almost paid!

  14. For someone who has several debts that have been lingering on past there usefulness and have now become a monthly struggle to balance into a working budget, who has no short term relief coming that is plausible, and who can make an informed, cost vs. lifestyle decision, a debt consolidation would be the most logical choice. I don’t think they are the money sucking leeches that some urban myths would have us believe. nor however, do I believe they are Cinderella makeovers for your money problems. Like anything that is going to effect your financial well being for the foreseeable future, and that comes with terms and conditions that have to be read and understood by all parties involved financially, debt consolidation should be thoroughly researched both in general and by individual company, as in the end, the company that is helping you, is helping themselves as well. Not that this is a bad thing, it would be the same if a well to do relative helped out and paid off all of your debt under the conditions that you now pay them so and so much per month for however long it takes. Its just that you’d hope to get more favorable terms from a wealthy relative. So, keeping this in mind, look for the terms that you can most easily live with, be it longer terms or lighter payments. Also try to think what your future needs will be as this is likely going to be with you for awhile. And if the terms allow it, by all means pay extra when you can to reduce the interest paid and the length of time spent paying on the debt. This may mean that you have to hold on for awhile before getting the latest gadget but I was brought up believing that you saved up for what you want and need and if you didn’t have enough you either saved more or you obviously didn’t want or need it that bad.

  15. While debt consolidation sounds like a great opportunity for a lot of people won’t it also make it easier for people to purposefully commit a type of fraud? I could see someone taking a huge advantage of this. Like “hey, I know I can just get all of my loans consolidated, so I don’t need to worry about being responsible”! I’m definitely not against this but is there a way to track those who actually need help and those who are abusing the system?

    1. Good question Mary. I don’t think that most people would want to risk ruining their credit by falling behind in late payments and accumulating debt just to plot a debt consolidation. Also, though a debt consolidation eliminates the stress of juggling multiple payments and may even lower your interest rates, it also tends to extend the your payment for a longer period of time, so overall you could end up paying more on the loans than you would have normally, but at least you have relief now – which is the what people really want/need when do a debt consolidation.
      Here’s more on the Pros & Cons of debt consolidation loans:
      http://debtconsolidationcure.com/2469/debt-consolidation-loans/

  16. I’m not in debt, nor do I intend to become in debt, however, my girlfriend had gotten into debt and went through bankruptcy. Now, even though she doesn’t have that debt hanging over her, she found that her bank won’t even consider giving her a loan for another four years. She may have considered consolidation, I’m not sure, but after being rejected from getting a loan perhaps consolidation could have been a good way to go over bankruptcy.

  17. I hadn’t ever actually considered debt consolidation before. Our family’s debt increased exponentially over the course of just a couple of months when my husband experienced a cut in his work hours with almost no warning at all. Employment is hard to find right away for a stay at home parent with a huge gap in work history, so I’ve had issues getting together the funds to help cover things. Maybe this is an option.

    1. Hello Nina, yes it definitely is an option to explore. Perhaps it will be the best solution for you and your husband’s situation. All the best to you.

  18. Yes, debt consolidation will help you get your head above water, but it’s not the same as being dry. This won’t relieve your debt only make it slightly easier to deal with. Alphabetizing your possessions will help you remember where everything is but that doesn’t pay your mortgage. Even to say debt consolidation is the first step is erroneous. Not going into debt is the first step.

    1. Thank you for your comment BJ. Yes, it would be great if people didn’t fall into debt at all, oh what a perfect world that would be. But just remember that sometimes uncontrollable circumstances and just plain ole bad luck can sometimes throw even the most responsible people into the debt dungeon. Debt is not always due to poor money management; sometimes it just the cards that a person has been dealt in life…so just keep that in mind. Thanks again for your comment.

Leave a Reply

Your email address will not be published. Required fields are marked *