Are your credit cards maxed out, your overdraft at the end of its tether, and your debt seems to keep piling up? If you are battling to pay off your mountain of debt, you may want to consider debt consolidation. It is a debt settlement or debt repayment strategy that you can negotiate with your creditors. It involves making a partial payment which acts as full satisfaction for the debt. If your creditors agree, you can pay just a percentage of the outstanding balance and the rest of the debt will then be cancelled for good.
If this sounds like an enticing option for you, here are a few more benefits of debt consolidation.
- It Can Help You Avoid Bankruptcy
One of the main reasons people choose to approach a debt consolidation company is to help them avoid bankruptcy. As you are probably aware, bankruptcy is something that will follow you for the rest of your life. A bankruptcy entry can remain on your credit report for 10 or more years and many credit card, job applications, and loan companies will ask if you have ever filed bankruptcy, long after your credit record has cleared. If you happen to answer no and the lender later discovers that you have previously filed for bankruptcy, you are at risk of being charged with fraud, or losing your job.
When it is done properly, settling debts with your creditors can help you avoid having to file for bankruptcy and having to deal with the negative consequences of bankruptcy. On the other hand, debt consolidation will only show on your credit report for a few years and there is no public record of you having settled your debts. That means that once your credit reporting time limit runs out on your settled accounts, you don’t have to deal with settlements anymore.
- Relief from Growing Piles of Debt
The goal of debt consolidation is not to win one over on your creditors by just paying them a percentage of your debt. So, it remains an unwise idea to continue racking up large amounts of credit card debt with the expectation that you won’t have to settle it all.
If you are genuinely having problems with paying back what you owe, debt consolidation can help you. Once the company you approach has negotiated and you have paid your settlement, you will essentially be debt free in less time and at a considerably lower cost than if you attempted to pay off those debts with a typical repayment schedule.
- Pay Off Your Debts Quicker
With a good debt consolidation program, you can repay your debts a lot quicker and in a lot less time that you would spend paying them back normally.
These are just three ways that you can settle your debt quicker and with a great deal less stress thanks to debt consolidation. A reputable company will help you negotiate a favourable payback amount with your creditors that you will be able to comfortable afford month to month.