Will Debt Consolidation Without a Loan Help You?
Get Your Free Debt Relief Analysis and Savings Estimate
Are you looking to get relief from your debts, including credit card debts and other types of unsecured debts and considering a debt consolidation loan? Do you have debts such as medical bills, department store charges, or even utilities? If you are looking for relief, you may be interested in finding out how much savings you can potentially have every month through one of your many debt relief options.
These days, many consumers from California and elsewhere are getting relief from debts through debt consolidation through credit counseling, debt settlement, or applying for a debt consolidation loan. These debt relief methods have become popular alternatives to bankruptcy - which has a more damaging and longer lasting impact to personal credit. To find out which debt relief option is right for you, answer a few, simple questions to get a free debt relief analysis and savings estimate.
What Does Debt Consolidation Mean?
The term "debt consolidation" has come to represent a wide variety of debt relief options. But what it typically involves is combining, or "consolidating," credit card and unsecured debts into one, more affordable, and more manageable monthly payment made to a credit counseling agency that, in turn, distributes funds to creditors. Many consumers also refer to debt consolidation as a debt management plan or DMP. When you enroll in a debt consolidation program, you will speak to credit counselors who will review your finances, taking into account your debts, income, and other obligations.
Once they have a good understanding of your financial footing, credit counselors typically develop a strategy to help reduce your debts, and they do so by submitting proposals (on your behalf) to creditors asking for reduced interest rates, or the waiving or elimination of any late fees or penalties. Creditors that agree to the proposals are placed into the debt management plan.
The goal of debt consolidation is, with a single, more structured, and more affordable payment plan, you can, ideally, direct more of your payment towards paying off the principal of your loans rather than just the interest - and eventually, reduce your debts sooner than if you continued making the monthly payments on your credit card debts at higher interest rates. If you are interested in finding out how much you can save every month through debt consolidation, request a free debt relief analysis and savings estimate - from CaliforniaDebtRelief.org.
How is a Debt Consolidation Loan Different From Debt Management?
Many consumers often make the mistake of thinking that debt consolidation or debt management is the same as taking out a debt consolidation loan when, in fact, they are fundamentally different. As noted earlier, debt consolidation involves combining your unsecured and credit card debts into a single, more affordable payment plan made to a credit counseling agency. In contrast, with a debt consolidation loan, you are combining your high-interest debts into one, lower interest loan.
A debt consolidation loan involves taking unsecured debt and paying it off with funds that come by way of a "secured" loan. In other words, it is generally a loan where you would have typically put up your home or other asset to get approved. In many cases, consumers who get approved for a debt consolidation loan generally end up using their credit cards again. As a result, many of them will have new, high-interest credit card debts to deal with on top of their loan. Under this scenario, a debt consolidation loan has generally made their debt situation go from bad to worse. When you consider some of the hidden pitfalls that may occur when taking out a debt consolidation loan, it is generally wise to explore your other debt relief options - like debt consolidation - that not only helps you reduce your debts, but can also give you some guidance about budgeting your finances.
How Much Can You Save With Debt Consolidation?
Each individual's debt situation is unique, as are the reasons for getting into debt in the first place. For many consumers in financial distress, the reasons may vary from having lost or reduced income, rising medical expenses, or an unexpected personal crisis. But regardless of the reasons why you are in a situation where you are falling months behind on your payments, debt consolidation may be able to help manage your debts and potentially lead to savings.
However, the amount of savings that you can potentially get, every month, depends on how much you owe, the current interest rates that you are paying, and any late fees or penalties you have. With a debt consolidation program, you will be provided with a more structured and more lenient repayment plan that can help you pay off your debts sooner than if you only continued to make the minimum monthly payments and at a pace that you can manage.
That's why it is a smart move to find out how debt consolidation can help you get back on track with your finances and help you manage your debts. Request a free debt relief analysis and savings estimate - now to get you started.