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10 Commandments of Debt Consolidation

29 June, 2011

Many borrowers always remain in the search of finding a way to get rid of debts and in this search many of them make mistakes, while others do the right things. There are many things that could help borrowers to get out of debt burden. One in these things include debt consolidation plan. There are many debt consolidation plans available, but not all of them suit everybody. It is very important for borrowers to first carefully go through the terms and conditions of debt consolidation plans.

Following are certain things that borrowers should avoid in any case while they think to take help from a debt consolidation plan.

Every borrower wants a debt free life and for this purpose they consult debt consolidator who is according to borrower a life saver. Debt consolidators seem to be very promising and they claim that they will solve all your debt related problems, but that could be done only after one payment. In reality, there is no single payment and there are many fees that you will have to pay with your monthly payment. This total fee is normally around 10%. Your payment will shift along creditors.  Some of them will take out payment directly from borrower’s checking account. Creditors grab their half and rest of that payment will be deposited to consolidator’s pocket. It appears to be a great deal but you can perform this duty without any debt consolidator.

Some creditors try to take advantage from your weakness if they find you under heaps of debts. You should not fall for loans that are easy to do types because interest rates are higher on such loans and this is nothing but to increase your problem.

There are heaps of credit cards that are offering credit transfer facility with low interest. You should not forget that these interest rates are low for only now and after a certain period of time they will rise. The major drawback is that all this practice will end up in hurting your credit rating and will leave a black mark on your credit report. If you think you can manage that then be prepared to do everything by yourself. Don’t forget to tell your credit card issuer to make a note of that report as closed when you request them.

Apart from hat you should avoid, there are certain things that you should do to handle your debts wisely. Following are the things that will be helpful for you.

It is the best option to take out home equity loan. Home equity loans come with lower interest rates and they can be tax deductible. Fee for these loan ranges from $75 to $100 anywhere. Another great option is to make most of the refinancing if you own equity on your property. You can stretch your payment over a longer period of time with refinancing and you can also get lower interest rates.

If you have good credit score then you can get help from unsecured loans. You can take out personal loans. Try to take out such loans from credit unions instead of banks.

You should search for other rescue options by contacting different companies. You should negotiate with them for better terms. You should also consult a reputable debt consolidation agency. You can easily find any non-profit making debt consolidation service.

On the whole, you have many choices to manage your debts and achieve financial stability. All you need is to search properly.

Personal Loan

by Gemma Maddock

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