Consolidation, Credit Counseling, or Bankruptcy?
What is a Consolidation Loan?
A consolidation loan is a loan taken out to pay off other loans or debt. Typically, the
consolidation loan is secured by equity in a home or some other real estate.
Sometimes it can be secured by other assets. In most cases the debts being
consolidated are unsecured debt, such as credit cards. Because they are unsecured,
credit cards and other charge accounts usually have much higher interest rates than
This difference in interest rates is the primary advantage to a consolidation loan.
With a lower interest rate, the consolidation loan's payment is lower than the total
payments of the other loans and debts being consolidated. This will relieve pressure
on your monthly budget and free up some extra cash. In the end, it can allow the
person taking on the consolidation loan to pay off the higher interest obligations and
become substantially debt free.
There is fierce competition for consolidation loans in the marketplace today.
Hundreds of different lenders offer these types of loans. As more consumers take
on greater credit card debt, there is an even greater demand for such services.
Credit card companies have relaxed the initial requirements to get a card in the last
few years. The change is allowing people with marginal credit scores to get credit
cards. In addition, many of these cards have higher credit limits than in the past.
This combination has encouraged many consumers to take on much higher levels of
debt than in the past.
In addition to the relaxation of requirements to get credit cards, lenders are
changing the way they do business once a consumer has a credit card. In the past
banks and other credit card issuers would not let you charge over your credit limit.
This has changed. Now many companies will accept a charge even if it takes the
account over the limit. They then charge a hefty fee raise the card holder's rate, or
both. This practice is quite common and can raise rates on a credit card to over
For example, let's say you have a credit card with a 14% rate and a $4,500.00
credit limit. Your current account balance is $3,950.00 and you're at the mall for the
Labor Day Sale. You visit a few stores and make some purchases. Hey, they were
really good deals! You don't have your exact account balance memorized and your
last purchase takes you a just few dollars over your limit. The charge is approved
and no one says anything.
Imagine your surprise when you get your next credit card statement. Your interest
rate has been raised to 29% and your minimum payment, which had been $72.00, is
now $148.00. To add insult to injury, the bank has added a $39.00 charge for
exceeding your credit limit. It gets worse. Not only does the 29% interest rate apply
to the purchases you just made, it applies to your credit card's entire balance!
This frightening scenario is repeated thousands of times a day throughout the United
States. It can make your credit picture much bleaker than you thought almost over
night. In addition, this credit card can affect your other credit card accounts.
Because this little ding negatively affects your credit score, many other credit card
companies may adjust your interest rate upward as well. Their reasoning, supported
by the fine print in that 4 page credit card agreement you signed when you got the
card, is as follows. You got the account at a specific interest rate, say 10% interest,
based upon your credit score. Now your credit score is worse, you are a greater
credit risk and the company needs to reflect that by charging you a higher interest
rate for your credit card.
This chain of events, from consumer's increasing reliance on credit to make more
and larger purchases, to the credit card issuer's liberalization of credit card
requirements and the change in the fee structure, has led to the increasing numbers
of people with large amounts of high interest debt. In turn, this greater demand,
coupled with the lowest interest rates in recent memory on home loans, have led to
an upward trend in the numbers of people looking for debt relief through a
The consolidation loan is the perfect vehicle for many (not all) people to break this
vicious credit cycle. It can do wonders for your monthly budget and really brighten
your financial picture. On this site you will find resources to see if a consolidation
loan is really your best choice and what the other alternatives are. You can get out
of the looming debt cycle. You just need to make a good plan and stick to it.
Sometimes professional help is needed, sometimes you can do it on your own.
Rejoice and be free!
A Consolidation Loan Can Be A Way Out of Debt For Good
LOAN AND DEBT
Consolidate Your Debt -
Get Out of Debt &
Live a Better Life Now!
Here you can find a valuable collection of information and resources to aid in your
journey out of debt and back to the land of good credit. After all, in society today, not
having bad credit is a must. It is getting difficult or impossible to function in modern
society without good credit. You cannot get insurance, rent an apartment, purchase an
airline ticket, rent a car, get a hotel room, and many other things, without a credit
check or credit card. In some cases, poor credit can even prevent you from getting a
job. How's that for a catch 22? If your credit rating is poor, or you have no credit
card, you will be denied the desired service or forced to pay a much higher price for it.
A consolidation loan or credit counseling can get you back on track by eliminating
much of your debt and improving your cash flow situation. You'll be well on your
way to an improved credit rating, and living debt free. You have many decisions to
make. Which path to restore your credit and get out of debt is the correct one for
you? Should you:
- Get a Debt Consolidation Loan?
- Seek Credit Counseling?
- File for Bankruptcy?
To make the correct choices you need as much information as possible. You can find
it here. You'll find valuable resources and answers to your questions on debt and loan
consolidation, credit counseling and bankruptcy that will help you make this difficult
Be Careful! A new tactic of banks and other lending institutions is to offer credit
cards to those who have just declared bankruptcy under the new federal bankruptcy
statutes. They know you probably need credit, but these card offers are not made
out of the goodness of the lender's heart! They are well aware that your need to get
new credit will make many people accept these credit card offers even though they
are usually at very high interest rates.
In addition, it is now impossible for the debt to be avoided through bankruptcy
because the debtor has just declared it and cannot do so again for 8 years after their
bankruptcy has been discharged. Caveat Emptor!!
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