We are living in an era of economic crisis and there are innumerable people who are trapped in the vicious cycle of debt. However, fortunately, it is relatively easier today to get loans. The consumers have a broad spectrum of options to choose from as per their credit scores and income. Loans, credit card debts, mortgages etc. could be leading to financial crisis and instability when borrowers have no clue as to what to do to get out of the debt. Debt consolidation could truly be the best solution for getting out of debt.

Debt consolidation is truly a simple concept. The borrower rolls all his existing multiple loans into one single new loan that would be requiring a low-interest rate or low monthly payment as compared to the previous debts together. If you are wondering how to tackle an ever mounting debt, you could get in touch with reliable credit counseling agencies. Their debt management plans could play a pivotal role in assisting you in getting back on track. Here are a few facts of consolidation that you must always keep in mind.

Third-party Payment: If you are fed up of juggling multiple accounts, you could consider an effective debt management plan. You could pay the credit agency that would be distributing your money among all your creditors until they have been fully paid. These agencies are not known to make loans or even settle debts. However, they seem to be having preset arrangements with many financial institutions that help in lowering interest rates, as well as, fees. Therefore, most of your payments add up to the balance and not finance charges.

Agencies Differ in Terms of Quality: There is a wide choice when it comes to agencies. Your finances are of supreme concern to you and so you need to be ultra-careful about the company you are choosing to work with. Choose a nonprofit credit counseling agency that is belonging to the FCAA (the Financial Counseling Association of America) or the NFCC (the National Foundation for Credit Counseling). These councils make sure that the members go through and pass stringent standards that are expected to be followed by the Accreditation or the council. The counselors must pass a relevant certification program.

All Consolidation Plans Are Similar: All plans are supposed to be pretty similar. Financial institutions are sincere and scrupulous and do not ever mete out any preferential treatment. The plans are all precisely structured. Your counselor would be determining the exact amount of time that would be needed by you for paying off your creditors in three to almost five years. You could terminate the consolidation plan whenever you want. You could be paying more for getting out of the debts much faster in case you are having some extra funds.

Counseling First and Then Consolidation: Pre-consolidation counseling is important. Counseling would be involving assessment of your overall financial situation. When a counselor is compassionate and knowledgeable, these sessions are bound to be motivating and enlightening.

Consolidation May Not Be Suitable for Everybody: Debt consolidation may not be suitable for every one of you. Most of your balances must necessarily be in terms of unsecured debts like Credit & Charge Cards, collection accounts, and personal loans. You should be able to pay, long term not only for a month or couple of months but at least, for years. You must have just about adequate money for savings, essential expenses and of course, your debt. It is a good idea to manage your own accounts if there is too much residual cash.

Consolidation Is Efficient, Simple and Steady: If you are following a consolidation plan, your payment is bound to be constant and you do not have to speculate each month over the amount to be paid. You would be paying the same amount till all your creditors are happy and satisfied.


Consolidation of debts is not an easy decision and you must not take it lightly. For instance, most financial advisers would be explaining and informing their clients that converting unsecured debts into secured debts would certainly not be the best solution. As such, it is a wise idea to stay away from home equity and avoid a mortgage or refinancing for paying off credit card debts. There is an impending risk of losing all your assets that you have used for securing the debt. It is, therefore, essential to evaluate and reassess all your available options very carefully, considering the merits and demerits and consulting with professionals before taking the final plunge.

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