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How Debt Consolidation Works

On Behalf of | Jun 25, 2013 | Bankruptcy

If credit card bills and other debt overwhelm you, consider the benefits of debt consolidation. While debt consolidation is not a solution for everyone, it can be a viable option for people in certain situations.

If you have multiple high installment debts, like student loans or credit card payments, debt consolidation allows you to pay those debts off with regular monthly payments rolled together. Making this one payment is often easier for people who have trouble staying on top of all their bills, since it reduces the chances of multiple late payments, charges, and dings on credit reports. Debt consolidation makes their regular payments more manageable, which is of substantial benefit to someone who has difficulty keeping track of what is due at which time.

Unfortunately, finding fair interest rates is a common challenge for people considering debt consolidation. Since the payments are now rolled into a singular sum each month, it might take longer to pay off all these debts as opposed to paying them off separately. Depending on your interest rate in the consolidation, you might accrue additional costs.

To understand more details about how debt consolidation works and whether it’s a good fit for your situation, consider working with an attorney. Debt and consolidation laws can be complex and vary by state, and an experienced lawyer will be knowledgeable about how to maneuver through the process. An attorney can also provide you accurate and detailed advice about your rights when it comes to creditors, so the time spent meeting with a lawyer can give you a significant amount of guidance.