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How can debt consolidation help in times of financial distress?

November 29,2010 by: Dallas Browne

All walks of life in this country have been affected in some way or the other by the global economic crisis that has hit the world. It’s not just you or your neighbor. People who have very diligent with their spending and savings habits are also not free from the affects of this mass murderer of the 21st century. With increasing debt, people have started taking the help of debt relief agencies to help them get over this difficult time. 

It will obviously hurt when you find that years of hard work are being washed down the drain. After giving your life to a company, you might find that they no longer require your services. You might also find that all those hard earned savings of yours are washed away because you chose to invest in the wrong companies. In such situations, where you have outstanding mortgages to pay off, education loans to clear, a car that was bought on credit etc, you need to think logically and find a solution. The only way to clear yourself from the burden of having multiple debts is to get a loan consolidation expert to help you out. 

Another issue with being in debt is that your credit score will suffer. Having a bad credit score means that you will not be able to get conventional loans to clear your debt. You will instead have to go for securitized loans or loans from companies that specialize in lending to people with bad credit scores. 

And if you have defaulted to such an extent that the very existence of your home is in question due to a pending court decision, taking the help of loan consolidation experts is the only recourse you have unless you have a wealthy and benevolent uncle who can help you out. 

When you go out looking for loan consolidation companies, find out a bit about the corporation. Do they have experience handling such issues? Can they remove the bad credit score from your record? You need to get guarantees from them before you start paying them, else you will find that the $40 you pay every month is going away in charity. Ask around with friends and family and also the internet on community sites where people can give a good review of a certain institution. And do remember to get enrolled in a company that is regulated by the government of other commercial bodies. 

Debt consolidation works by paying off all your outstanding debt with one single loan. This loan will then have to be repaid by you over a number of years. The interest rate will obviously be lesser than a credit card loan, but it will be more than a securitized loan. But if you have paid at least a portion of the debt on your home, you can get the home to act as security and obtain a much lesser interest rate. Do realize that it is never too late to act in the right direction and seek help from people who can make a difference.

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