In order to do this, you can either approach one of your
existing creditors with a debt consolidation plan, or else you
can talk with a third party lender about the possibility of
taking out lending with them in order to consolidate your
existing outstanding debt.
In this regard, it is very important to understand that "debt
consolidation" is not new money lending. Any lending you are
given is merely to consolidate the existing debt you have, and
the lender will ask you to declare and account for this. So,
although debt consolidation may be considered a "loan", it is
not a loan in its purest form. Reasons to Consolidate Debt
The overall reasons why you may wish to consider debt
consolidation are two-fold:
*In order to try and reduce the cost of your existing debt
funding.
*In order to try and do away with all the mess of having to pay
back lots of creditors and instead concentrate on one or two
large creditors; thereby hopefully making your money management
problems much more manageable.
As you can see then, given the right circumstances, debt
consolidation can be an extremely useful debt management tool.
However, if you are considering debt consolidation as a means of
managing your existing outstanding debt, you should also note
that there are two ways you can put in place an effective debt
consolidation program: (1) by yourself; and (2) using a debt
counseling service. Should you Consolidate Debt by Yourself?
In short, debt consolidation programs undertaken by you are by
far the cheapest form of working this useful debt management
program. But, self-regulated debt consolidation programs do
require a certain level of discipline. They do require you to
arrange for one or two creditors to accept to take over your
existing smaller debts. They also require you to make payment to
this creditor in a timely manner. In other words, there is no
financial overlord looking over your spending and making sure
you stick to a workable financial diet. For this reason many of
us who consolidate our debt believe we have just been given a
new lease of life and go out and spend, spend, spend. The net
result of this is not only do we now have new debt to repay, but
we also have the large consolidated debt to repay. As such,
self-regulated debt consolidation may not be the most effective
debt management tool. Debt Counseling Services
Conversely, debt counseling services are where you tell a debt
counselor what all your existing outstanding debt is. The debt
counselor then either arrangers with your existing debtors to
negotiate with him going forward with regard to the outstanding
debt, or arranges to consolidate all the outstanding debt as one
large debt. You then pay the debt counselor a monthly payment,
which he then either distributes to all of your existing
creditors or pays towards the one large debt. For providing this
service the debt counselor takes a commission off of you;
thereby making this form of debt consolidation more expensive,
but at the same time probably more effective.
Talbert Williams offers debt consolidation referrals and
advice. For more information, articles, news, tools and valuable
resources on debt solutions, visit this site:
http://www.1debtfreedom.com
About the author:
Talbert Williams offers debt consolidation referrals and
advice. For more information, articles, news, tools and valuable
resources on debt solutions, visit this site:
http://www.1debtfreedom.com
