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The Debt Consolidation Information You Need To Know |
By Irish Taylor
 What is debt consolidation? What types of debt can be consolidated? What are the benefits of debt consolidation? This article presents the most common questions about debt consolidation and the answers that you need to know.
What is debt consolidation?
Debt consolidation is the process of merging multiple debts from different creditors into a single account. Thus, instead of dealing with different creditors and juggling between payment due dates, a borrower must deal with only one debt with a single interest. Monthly payments are submitted to only one lender- the debt consolidation company.
Credit Solutions of America, Inc.What types of debt can be consolidated?
Can all debts qualify for consolidation? Only unsecured debts such as medical bills, insurance, school tuition, and credit card debt can be consolidated. This is because secured debts are secured by collateral. Therefore, in case of default, the lender has the right to repossess the collateral submitted and use the money to pay off the debts. With unsecured accounts, the borrower has no other choice but to pay off his debts.
What are the benefits of
debt consolidation?
First, the borrower can be relieved of the stress of constantly dealing with creditors. When a borrower fails to respond right away, some lenders may resort to harassment or unfair debt collection practices. Such problems can be avoided through consolidation.
Debt build up can also be stopped. As you prolong your repayment, you also incur the additional interest rates and penalty charges. The longer it takes you to complete your repayment, the more costs are added to your burden. With consolidation, your combined debts would have a much lower interest so you can save your money and focus on your repayment.
Can debt consolidation hurt your credit history?
Consolidation can initially pull down your credit score. However, the damage doesnt have to be permanent. As you keep up with your repayments, you can slowly improve your credit score. After six months of consistent repayment, you should be able to see a progress in your credit. In time, after completing your repayment, you can once again enjoy good credit.
Andrea Smith is a writer and consultant with Consolidate4Free.com and has been providing consumers and business owners with Free Debt Consolidation Advice since 1990. For years she has helped people with loan and credit problems especially pertaining to Debt Consolidation and Credit Card Debt Consolidation. Copyright 2008.
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