Credit Debt Consolidation - How To Bundle Credit Card Bills Together For A Lower Payment

Feb. 10, 2011 - PRLog -- Credit debt consolidation is one of the relief method available in the market. This particular method helps to bundle credit card bill together for a lower payment every month. There can be two approaches to this method. Both the variants are mentioned below:

Consolidation Loan: This is kind of self help method. Here the consumer need to pick up a consolidation loan from the market. The rates of interest for consolidation loans are usually on the higher end but when the monthly payments are calculated for the consolidation loan, it will be found that the overall payments made for each individual loan taken together is much higher than the payments for the consolidation loan. This is because of the fact that the other senior loans have high interest rates and the overall payments increase because of the high rates of interest applicable on each loan. The reason why the rate of interest is high for the consolidation loan is that the creditor takes a risk by loaning out the money to the consumers. There are chances that the consumer might default as in case of the already existing loans.

Once the consumer gets hold of the consolidation loan, he or she needs to use that money not for luxury but for paying off the existing loans. When the existing loans are paid off, all the other loans are virtually bundled in one and the consumer needs to make one monthly payment which is comparatively lower than the previous payments. This is how, the consumers can get a lower monthly payment.

Debt Consolidation Firm: This is where the consumers go for professional help. When a consumer hires a professional company, the consolidator from the firm contacts the creditors and inform them individually that the consumer is not in a position to repay the debts in full because of the weak financial condition. However, the consumer is willing to repay the debts in full and this is possible only when the creditors reduce the interest rates applicable and at the same time takes off some of the allied costs of the loans. These allied costs generally refer to service charges, late fee, over limit charges, insurance charges and a few more.

The creditors do not agree to this initially but eventually they do because the consolidator uses the threat of bankruptcy to force the creditors to accept. The creditors never want bankruptcy because, if the consumer files for bankruptcy, they will lose the whole of the money and hence, the creditors agree to the terms and conditions. They reduce the interest rates and remove some of the allied costs and then re-amortize the loans. This reduces the monthly repayment burden for the consumer. The consumer then needs to make one payment every month to the consolidator who then distributes the money among the creditors. This is continues until all the dues are paid off completely.

Debt settlement is a viable option to filing bankruptcy and is becoming increasingly popular amongst Americans with over $10k in unsecured debt. Creditors are ready to negotiate. You can literally eliminate 50% of your unsecured debt with a settlement. Check out the following link to locate legitimate debt help in your state.
Free Debt Advice
(http://www.creditcardsettlementadvice.com)
Contact us for free debt advice = 8883613619