What is Debt Consolidation?

Here are some sources for debt consolidation and debt counseling:

Debt Consolidation - Get Out Of Debt
http://www.askaquery.com/Answers/qn1643.html

How to Hire a Debt Counselor?
http://www.askaquery.com/Answers/qn1584.html

Debt Management and Building Wealth
http://www.askaquery.com/Answers/qn1581

gambling debt counseling?
http://www.askaquery.com/Answers/qn481.html

Online Debt Management Programs
http://www.askaquery.com/Answers/qn1580.html

Debt consolodation is when you take all of your debt (credit cards, mortgage, etc), add it up, and put it in ONE loan to pay. Great to do, helps with interest, but you have to be careful because you have now opened up all of your lines of credit and are able to rack up your bills again. If you consolodate your debt, put all your credit cards away and don't use them.

If you have a number of debts you can get say a bank loan and pay off all your debts and just pay off the one loan and if done in a beneficial way you may reduce the interest repayments (particularly if some of your debt interest rates are high) from several debts to just the one interest rate of just one bank loan.
Sometimes this works out a good way of paying debt but it is NOT always the best option.

Debt consolidation entails taking out one loan to pay off many others. This is often done to secure a lower interest rate, secure a fixed interest rate or for the convenience of servicing only one loan.

Debt consolidation can simply be from a number of unsecured loans into another unsecured loan, but more often it involves a secured loan against an asset that serves as collateral, which is most commonly a house (in this case a mortgage is secured against the house.) The collateralization of the loan allows a lower interest rate than without it, because by collateralizing, the asset owner agrees to allow the forced sale (foreclosure) of the asset in order to pay back the loan. The risk to the lender is reduced so the interest rate offered is lower.

Sometimes, debt consolidation companies can discount the amount of the loan. When the debtor is in danger of bankruptcy, the debt consolidator will buy the loan at a discount. A prudent debtor can shop around for consolidators who will pass along some of the savings. Consolidation can affect the ability of the debtor to discharge debts in bankruptcy, so the decision to consolidate must be weighed carefully.

Debt consolidation is often advisable in theory when someone is paying credit card debt. Credit cards can carry a much larger interest rate than even an unsecured loan from a bank. Debtors with property such as a home or car may get a lower rate through a secured loan using their property as collateral. Then the total interest and the total cash flow paid towards the debt is lower allowing the debt to be paid off sooner, incurring less interest. In practice, many people are in credit card debt because they spend more than their income. If that habit continues, the consolidation will not benefit them much because they will simply increase their credit card balances again.

Because of the theoretical advantage that debt consolidation offers a consumer that has high interest debt balances, companies can take advantage of that benefit of refinancing to charge very high fees in the debt consolidation loan. Sometimes these fees are near the state maximum for mortgage fees. In addition, some unscrupulous companies will knowingly wait until a client has backed themselves into a corner and must refinance in order to consolidate and pay off bills that they are behind on the payments. If the client does not refinance they may lose their house, so they are willing to pay any allowable fee to complete the debt consolidation. In some cases the situation is that the client does not have enough time to shop for another lender with lower fees and may not even be fully aware of them. This practice is known as predatory lending. Certainly many, if not most, debt consolidation transactions do not involve predatory lending.

Debt consolidation means using a single loan to replace multiple loans.

There are several reasons someoneone might want to do this:

+ It means one payment instead of many (more convenient, save time, save postage, less to remember)

+ The payment might be less (because the rate is lower and/or the term of the loan is longer)

+ The interest on the debt might be lower

+ If the new loan is secured by a home the interest may be deductible for tax purposes

+ It might free up liens on the old loans (like a car payment)

Throwing all your debt together and paying it off at once.

It's when you have several loans / debts that need to be paid and instead of having several bills to send out every month you "consolidate" them into one payment.

Just what it says - you take all you debt and make one payment a month, as opposed to paying each bill individually.

Debt consolidation means that you have several different bills causing debt (credit cards, loans, etc.) A company offers a service to help you pay your bills all together. You pay one bill every month that combines the interest ratesand payments from all your bills/debt.

www.bestdebtservices.com

returns which re paid off in short .

IT'S WHERE YOU TAKE ALL YOUR DEBT AND MAKE ONE LARGE PAYMENT. YOU USUALLY TAKE ALOAN FROM A BANK

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