Should You Consolidate Your Debt?

Living in a mountain of debt can be a huge struggle, especially if you are required to pay off a large debt in a short time on top of your basic necessities – like food, child care, gas, and utilities. It’s a disastrous recipe for missing payments, and it won’t be long before intimidating calls from creditors and debt collectors start to disrupt your day. As months go by without a concrete plan, an adverse effect on your credit score can most likely occur.  

How Does Debt Consolidation Work, Is It Right for You? 

Debt consolidation is an excellent option when monthly repayments become difficult or impossible. Which takes into account multiple debt payments and turns them into a manageable solution, but be careful, not all debt consolidations are the same. While not paying may give you a short relief, over time it can cause unfavorable effects on your credit rating, which will be with you for years.  

Consolidating your debt helps you restructure your loans, resulting in lower monthly payments. There are two ways debt consolidation can be done: One is through the use of a debt management program that combines unsecured loans into a single payment. The other is a “debt consolidation loan” that takes out a new loan and redeems the other.  

Non-profit debt consolidation program 

As mentioned above, non-profit debt and consolidation programs merge your unsecured debt into a single, lower payment, and in some cases reduce payments and interest rates by up to 50%. Examples of unsecured debt are credit cards, car loans, student loans, and medical bills. CreditGUARD strongly believes that a better way to reduce debt and rebuild credit rating is to make scheduled payments. This can be achieved with the help of a certified credit advisor who negotiates with your creditors on your behalf. We also offer educational and budgetary tools, and we do this through the use of our Certified Credit Counselors, who negotiate with creditors on your behalf, and a variety of other methods. This is important because a balanced budget teaches you a positive financial lifestyle that will free you from debt for years to come.

The second approach is to take out a loan to pay off unsecured debt, but this is a loan to consolidate the debt and is a quick solution to your financial problems. By reducing monthly payments, the loan can be extended for a longer period at a lower interest rate than a conventional loan. Most debt consolidation loans cannot offer a higher interest rate than the one you already have. These two factors often make the difference between a consolidation loan and a conventional loan in terms of interest rate and amount. 

In addition, the new loan allows you to top up your credit card, and it doubles the debt that got you into trouble in the first place. This is where financial education and budgeting come in, and the only real solution is not to get into debt. Here’s where to start: Choose a good debt consolidation program to help you manage your finances.  

Debt is not a disgrace, but millions of Americans are suffering the same financial burden. Say no to harassing calls from creditors, credit card bills, or other debts. 

With CreditGUARD of America, you can turn your life around and move on the right path to a better financial future. For helpful financial tips and non-profit counseling, call us at 800-282-8497 toll-free or visit CreditGUARD of America’s website at https://www.creditguard.org/

 

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