Regain Control And Establish Credit with Debt Consolidation Programs

Regain Control And Establish Credit with Debt Consolidation Programs
Photo by Erin Taylor – CC BY-SA 2.0

Whether a person falls into financial distress through loss of employment or irresponsible spending, the ending result of out of control debt is depressing. For most, daily responsibilities of life evaporate monetary funds and leave little additional cash to pay off or even pay down existing debt. The cycle becomes one of survival and endurance. It is a cycle with no end. Breaking through the repetitive game of late fees, finance charges and collection calls can be accomplished with debt consolidation programs. As with all third party companies, allowing them to oversee a person financial stability has both positive and negative aspects. It is up to the consumer who is swimming in debt to decide whether the benefits outweigh the disadvantages.

When credits cards and student loans become excessive and the late fees among them are unmanageable, debt consolidation loans can help reduce multiple payments into one. This allows the individual in debt to kill multiple birds with a single stone and regain credit. The disadvantage of this process is that is does not reduce the amount that is owed. Often times the interest rates through debt consolidation is the same or worse than the original rates by multiple creditors. Combining the debt can also lead to the same payment just spread over a long duration of time.

Debt consolidation loans and balance transfers with a zero percent interest rate can cool the flames that are setting a credit score on fire. However, the problem is only temporarily resolved. The same instinct to consolidate is often the same rationale that allowed debt to occur originally. It is another act of borrowing. A resolution to be more disciplined with money and learning how to be smart with money is often more effective than any other consolidation loan. Often times, the zero percent interest loans are not offered to those with damaged credit and the cost of getting out of debt was more than it was before consolidation. Almost 80{8e6cf663dd8bbfda1f4fdd38af84969e57c1756d87f56947f5c326d1d8b26fdc} of people that have used this approach have found themselves in the same position years later. The problem lies much deeper in the financial management and responsibility of an individual.

A significant advantage of using a debt consolidation program is not being forced into declaring bankruptcy. This cancerous term on a credit report haunts its owners for almost a solid decade. Being able to decrease debt without admitting defeat is an accomplishment. If bankruptcy is imminent, pursing a program that can help wrangle in angry creditors and cool down the flames is a reliving alternative to people in debt that feel that they have no where else to go.

When pursing the assistance of a debt consolidation program, a person is making an effort to regain control and responsibility of his or her financial future. While this will be reflected on a credit report, it can be interpreted in different ways. It can show that a person has allowed their debt to become unmanageable; it can also reflect an effort to mend ways. As with all credit reports reviews, the interpretation is in the eye of the beholder. A debt consolidation program can be interpreted in either a positive or a negative way.

Debt consolidation is when the monies owed are micromanaged by a larger company. The full debt owed it paid by the consumer to the consolidation company. Another option that allows a person with damaged credit to regain control of their finances is debt settlement. This second option, unlike the first, allows a person to negotiate a lesser amount to pay off the principal balance. Debt settlement companies are often a more favorable option for consumers who cannot pay back debt in full.

The disadvantage of debt consolidation is that is does not remedy the issue; rather it transfers it to another location. It does stop the collection calls and harassing mail. This approach is by no means a quick solution to a large debt program. The program is elongated over a period of years, sometimes as long as a decade. People seeking to repair their credit quickly would not want to pursue this approach to financial and credit repair.

In the overall effort to regain financial freedom and repair the damage that has been done in the past, a period of self reflection is required. Acknowledging how the problem occur and spiraled out of control is as important as fixing it. Debt consolidation programs are available for persons who can repay the debt they created in full. There are other options available for persons who cannot. Not all remedies are one fits all solution. Research all the options that are available before pursing one seriously. Decisions made in haste cause debt and additional stress. Decisions made with thoughtfulness and care can change a debt nightmare into a financial freedom reality.

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