Debt Consolidation- A Healthy Idea or Not?

Debt consolidation

Given the dynamic nature of the market, there is a certain possibility of reaching a point where the debtor may be in the danger of bankruptcy, insolvency or another fiscal emergency may always linger in the horizon. The options available for a bailout at such point are often limited. This is where the debtor can take a plunge of opting debt refinancing that entitles one to take a single loan to pay off the smaller ones, in other words, Debt Consolidation.

Lending institutes such as Fast Track Debt Relief offer debtors a recourse to repay loans by providing them the option of debt consolidation. The Consolidated Debt is mostly a second mortgage or home equity line of credit. This requires the home to be put up as collateral and the amount of loan being less than that of equity. In certain countries, these loans may also provide certain tax benefits to those who itemize their deductions in case of home equity line of credit.

The perks of Debt Consolidation Programs is that they help consumer consolidate wisely by providing a relatively lower interest rate and helping them pay off debt faster. They can also help the consumers in managing the repayment to minimize the chances of late or missed payments. More often they have a fixed cost to process payments and the repayment can be spread over a longer period. However, such programs may consist of costs such as fees, interest, and points where one point equals to approximately one percent of the loan amount.

Other options to consolidate debt can be ‘balance transfer’ where you can transfer the balance onto a single card with 0% interest for a set time period. It should be taken into account that in such cases the terms and conditions should be read carefully for all the loopholes. In the recent years, peer to peer consolidation is widely used that allows individuals to lend loans to each other. Peer to peer companies help connect people which need loan with ones that can invest a certain amount. This is seen as a win- win situation for the both the parties.

People with numerous debts struggle with higher minimum payments which leads to the domino effect where, you miss payments, interest rate gets raised and you struggle to stay afloat. Debt consolidation can become a powerful tool to help you take control and collate debts that are not tied to an asset. It  helps structure all your debt payments into one single payment thus, helping you keep your head above water.

Weekly Round Up – May 15, 2014

Get out of debt text magnified on whiteBefore we get to the good reads!

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A Few Good Reads

Here are a few of my favorite reads from the past week.

1. Young Adults, Student Debt and Economic Well-Being: 

Student debt burdens are weighing on the economic fortunes of younger Americans, as households headed by young adults owing student debt lag far behind their peers in terms of wealth accumulation, according to a new Pew Research Center analysis of government data. About four-in-ten U.S. households (37%) headed by an adult younger than 40 currently have some student debt—the highest share on record, with the median outstanding student debt load standing at about $13,ooo. [Read more…]

Weekly Round Up – May 02, 2014

Debt LoansBefore we get to the good reads!

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A Few Good Reads

Here are a few of my favorite reads from the past week.

1. Ukraine’s failure to pay gas debt may cut gas supply to Europe – Russia’s energy minister: 

Ukraine’s growing gas debt may lead to the failure of the country’s transit obligations and the reduction of gas supplies to south-eastern Europe, said the Russian Energy Ministry. [Read more…]

Weekly Round Up – April 25, 2014

DebtBefore we get to the good reads!

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A Few Good Reads

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1. Students can avoid drowning in debt with student loans: 

Students should only borrow money they feel comfortable repaying, a representative of a local credit union said in a session on building or rebuilding credit. [Read more…]

Weekly Round Up – April 04, 2014

loanBefore we get to the good reads!

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A Few Good Reads

Here are a few of my favorite reads from the past week.

1. Student loans is second largest source of debt in US households, says recent study: 

Steven Sabel, a former firefighter, decided to go to law school after a knee injury prevented him from returning to duty. He had wanted to be a lawyer since he was young.

Sabel, now a second-year student at UCLA, is financing his degree almost entirely on loans. Tuition at the UCLA School of Law costs more than $45,000 a year, and Sabel expects to graduate with around $200,000 in debt. [Read more…]

Weekly Round Up – March 21, 2014

Debt LoanBefore we get to the good reads!

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A Few Good Reads

Here are a few of my favorite reads from the past week.

1. Who’s to blame for exhorbinant student loan debt? 

Every so often some politician makes it their (brief) mission to address the burdens of overwhelming student loan debt. Universally overlooked is that these students chose their institutes of higher learning knowing exactly what the costs of education would be. They intentionally overlooked smaller, less prestigious schools such as State colleges or Community colleges — not to mention technical or trade schools — in lieu of high-priced universities with name recognition. [Read more…]