Benefits of Debt Consolidation - Why You Should Consolidate Instead of Declaring Bankruptcy
As the unemployment rate continues to climb with companies reporting lower returns, many people often resort to declare bankruptcy without exploring other options.
If you are struggling to make your payments on time or are drowning in bills, then an option that should be immediately looked at is debt consolidation.
This route is often overlooked but provides many with the opportunity to get back on the right track towards a debt free future.
There are typically two types of debt consolidation depending on your situation: Either pulling out a loan to pay off all your debt or going through a company that acts as a third party to negotiate better rates for you.
The benefit of pulling out an unsecured loan to pay off all your debt should be obvious as you can pay off all your debt with just one loan.
Not only are your interest rates lower, but managing one loan becomes a lot easier rather than juggling multiple bills at once.
Third party companies typically charge a fee for their services but are usually well worth it as they can negotiate lower rates and lower your monthly payments.
You simply hand over your debt to them and you make a payment each month to them where they then disperse the funds to your creditors.
Before you think that your financial situation is doomed, be sure to explore other alternatives to getting out of debt instead of throwing up the white flag.
The benefits of debt consolidation almost always outweigh the disadvantages of declaring bankruptcy.
The lower monthly payments will most definitely open up additional funds that may not have otherwise been available to you.
Not only will you have reduced interest rates, but consolidating your loans will also help to keep your debt in check.
Depending on your financial situation, pulling a loan or opting for a third party service may be ideal.
Be sure to always deal with a reputable company and to seek financial counsel.