What Debt Consolidation Doesn’t Accomplish

Sept. 13, 2011 - PRLog -- When seeking advice toward resolving overwhelming credit card debt, many consumers will at first look toward debt consolidation as an option.  If the ultimate is to pay off debt and be out from under massive credit card debt and interest rates for good, then there are far better ways to do it.  Real debt relief solutions don’t just rearrange credit card debt, it eliminates it completely.

In debt consolidation, it is true that all outstanding balances are rolled into a nice tidy package, which offers the consumer one payment per month rather than many.  The monthly payment is often much less than all total outstanding debts currently being paid off, and that’s attractive.  It seems like a step in the right direction.  But, it isn’t.  In order to consolidate debt, it is necessary to trade unsecured credit card debt into secured debt through a loan that will pay off all creditors.  To get the loan, it means using collateral in the form of a home or other property.  These loans are long term and certainly at a lower interest rate than credit card rates, but the consumer is also compromising hard assets in the process, and for a long period of time.

This secured debt consolidation can be avoided with the use of other debt restructuring methods like debt settlement or debt management.  Both work to help a consumer truly get out of debt rather than build up another type of longer term financial commitment.  In thinking of solutions, common sense says that adding more debt is not a type of real relief at all.  It is simply restructuring, or moving around, what is owed and endangering home and property in the process.

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Debt consolidation loans are a solution if everything stays the same.  But how many know that their income level will stay the same for fifteen years, or that what seems like a manageable amount now won’t become a burden in time due to loss of employment or illness.  Defaulting on one of these loans can mean the loss of a home due to default.  Understanding this aspect of consolidation loans is some of the best credit debt advice you can get.  For younger people, who one day want to rebuild a sound credit rating and who aspire to home ownership, it can be a huge roadblock to the future.  For older people, who own their homes outright, it may be a workable solution.

Once a consumer understands the possible results of this, the more they understand why debt consolidation reviews are not very good.  The goal is to reduce credit card debt and not endanger other assets in the process.  Both debt management and debt settlement solutions work toward getting rid of credit card debt without turning it into a long term liability.  Each method keeps unsecured debt unsecured while reducing the total amount owed to creditors.

The programs may not be as simple or straight-forward on the surface, but they work faster and the consumer is ultimately out less money.  These methods work within three to five years as opposed to traditional consolidation, which can entail collateral for fifteen years and beyond.  It is still possible to consolidate debt and make one monthly payment, but there is no collateral needed - just a will to get a type of relief and make it work for you.

National Relief is one of the country’s oldest and most respected debt settlement organizations.  If you have questions regarding your options, call us.  It’s free and we can help you make the calculations needed for a sound decision.

http://www.nationalrelief.com

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National Relief is a debt settlement company, whose dedicated team of professionals has but one goal, and that's to help you turn your life around. It doesn't matter how much unsecured debt you have, we are there to help.