According to the report of Pew Charitable Trusts released in July 2015, about 80% of consumers in America are in some kind of debt or the other. It may be needless to mention that mounting debts can be frustrating and a stumbling block in achieving your aspirations of life. Naturally, you will have to find ways and means to free yourself from the clutches of debt. One of the ideal approaches in this regard is to avail the facility of debt consolidation, which is also called as consolidation of debts.
Fuse multiple loans into one new loan account:
When you have multiple debts like, for example, auto loan, study loan and credit card loan, you can consolidate or fuse all these debts into one. There are banks and other financial institutions agreeing to provide you the debt consolidation facility. In such cases, the bank agrees to consolidate or pay off all the different types of debts you have. With that you are virtually closing all the multiple debts and in their place, you are opening a new liability with the banker agreeing for consolidation of loans. Normally, consolidation of loan facility will be available at a reasonably lower rate of interest.
But, you should not mistake debt consolidation with debt restructuring. As already said, consolidation of debt is grouping or combining multiple debts into one large debt or loan. But, debt restructuring is renegotiating the terms of repayment on the existing debt with the same banker. In other words, by restructuring the banker makes your repayments much easier. Normally, restructuring may give you the advantage of lower rate of interest with reduced instalments. In some cases, it may also involve enhancing the duration of repayment. Normally, debt restructuring involves entering into revised agreement with the bank. This facility is very much helpful for those nearing bankruptcy.
Advantages of consolidation:
By availing the facility of debt consolidation Australia banks offer, you are taking one loan to pay off the multiple loans. Therefore, instead of making multiple payments to different loan accounts, you are making a single payment to banker who has given you the consolidation of debt facility. With multiple accounts being fused into one account, it reduces your stress. As already said, consolidation of debts also entitles you to the advantage of lower rate of interest, and naturally this helps you to save a considerable amount of money. In addition to these, consolidation of debt also helps you to increase your credit scores. Check out Debt Mediators
Debt Consolidation of credit cards:
Many of the credit card users are making the best use of debt consolidation facilities. There are exclusive credit card consolidation companies that agree to consolidate your debts on multiple credit cards into one large loan account. Further, some of the banks offering credit cards also have now come up with this consolidation of loans under credit cards.
No new debts please:
Consolidation of debt is a wonderful plan provided you make the best use of it. Once you avail the debt consolidation facility or consolidate credit card debt, you should be careful and ensure that you do not again get into any new loans. If you do so, you may be caught into the cobweb of debt, and it may be very difficult to come out of it.
For more information, visit at https://www.debtmediators.com.au/credit-card-debt-solutions/consolidation/