Essential Information About Consumer Debt Consolidation
The total US consumer debt as of April 2010 is 2.44 trillion and of that credit, debt (unsecured debt) made up $864 billion of it. That is an impressive total to be sure, and most credit consumers hold multiple credit cards, which makes credit debt consolidation a good idea for some embattled consumers struggling to pay off their credit card debt. What follows are some things you should know about consumer debt consolidation.
Consumer debt consolidation takes consumers various credit card debts and unsecured lines of credit and rolls these into a single payment made once a month with what is usually lower interest rates.
Consumer debt consolidation is considered as an answer by consumers who do not see an end to the credit card bills, have multiple unsecured credit lines and are paying high rates of interest on them.
To consider consumer debt consolidation the person should have a regular income able to meet the payments or the whole exercise is useless.
Consumer debt consolidation can work two ways. Some credit counseling companies will have you mail them a check each month and they disburse the funds to the various credit card companies. Usually there is some negotiation involved with the credit card companies so that monthly minimums might be lowered or fees and penalties waived.
The other way consumer debt consolidation can work is to work with a company and get a debt consolidation loan, which is repaid, in a single sum. The advantages are that the credit cards are paid off and no further penalties or fees can be accrued to them. In addition, these types of loans are generally repaid in 5 to 10 years.
Consumer debt consolidation works with the help of the consumer that means maintaining a monthly budget, and not running up more credit card debt. If your aim is to be debt free or just to stop the harassing calls more debt is the last thing you need.
A consumer might believe they need consumer debt consolidation when in actuality they need debt settlement, and it is always best to discuss this with an expert first and explore the options in some cases consumer debt consolidation and debt settlement may actually go together (in the case of overwhelming debt the consumer simply can't repay).
There is much more to know about consumer debt consolidation, such as if you have one of the very few credit cards which has a permanent low interest rate, then consumer debt consolidation may not be for you. If you are struggling in those circumstances then debt settlement may provide a better answer.
If you are struggling or receiving harassing calls and are, looking for an answer to credit debt then putting it off will generally not help the situation. In fact, for those are harassed by credit collection agencies it only makes it worse. Instead, seek professional advice and consider consumer debt consolidation as a way to relieve some of the financial stress, and be debt free much sooner.