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Information on Types of Debt Consolidation
If you are thinking about consolidating your debt, you are
probably looking for a good source of debt consolidation
information. The best source for this type of information is an
accredited credit counselor. A counselor can walk you through
all of your debt consolidation options, describing the
advantages and drawbacks of each. Some of these options may
include:
Home Equity Loans
Using the equity in your home is a very popular option for
paying off debts. However, it is important to do your research
before committing to this or any other option. Consolidating
your debt through a home equity loan does have risks to go along
with its benefits. The biggest drawback is that you are turning
your unsecured debts into a debt that is backed by your home. If
something happens and you cannot meet your obligations, you
could potentially lose your home. This is important information
to consider when consolidating your debt in this way.
Debt Management Plan
Another form of consolidation is a
debt management plan.
Under this plan you will still pay off all of your original
creditors, so a loan is not involved. Your payments are
consolidated into one low monthly payment, made to a credit
counseling agency. The agency then disperses those funds to each
of your creditors monthly. In addition to consolidating these
debts, the plan offers additional benefits. These benefits can
include lower interest, waived fees, and in many cases a
lower
monthly payment.
There are numerous other options that may be advertised as or
considered “debt consolidation.” One example of this is debt
settlement. However, debt settlement is not actually
consolidating your debt. When you work with a debt settlement
company, you usually make one monthly payment to the settlement
company. However, the company simply holds on to these payments
until you have enough money saved up to make a settlement.
Meanwhile, your accounts are delinquent and continue to accrue
interest and fees. If you are considering a debt settlement, it
is imperative to carefully research the process so that you know
what the costs (which can include additional income taxes on
"forgiven debt") will be.
Whatever form of consolidation you are considering, you will
want to get as much information as possible. Be sure research
all of your options carefully, and check up on any company
before agreeing to work with them. Get all of the debt
consolidation information before jumping into a consolidation
plan. |
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