What Is Debt Consolidation?
Debt consolidation describes the act of taking out a new loan to repay other liabilities and consumer debts. Multiple debts are combined into a single, larger debt, such as a loan, generally with more favorable payback terms-- a lower interest rate, reduced monthly payment, or both. Debt consolidation can be used as a tool to take care of student loan debt, credit card debt, and other liabilities.
How Debt Consolidation Works
Debt consolidation is the process of using various kinds of financing to repay other debts and liabilities. If you are burdened with various kinds of debt, you can request a loan to consolidate those debts into a single liability and pay them off. Payments are then made on the new debt until it is paid off in full.
The majority of people apply via their bank, credit union, or credit card provider for a debt consolidation loan as their first step. It's a good place to start, especially if you have a great relationship and payment record with your institution. If you're denied, try looking into private mortgage companies or lenders.
Creditors agree to do this for a number of reasons. Debt consolidation increases the likelihood of collecting from a borrower. These loans are typically offered by financial institutions such as banks and credit unions, but there are other specialized debt consolidation service companies that offer these services to the general public.
A vital point to note is that debt consolidation loans do not erase the original debt. Instead, they simply transfer an individual's loans to a different lender or kind of loan. For actual debt relief or for those who do not qualify for loans, it may be best to look into a debt settlement rather than, or in conjunction with, a debt consolidation loan.
For More Information About Debt Consolidation in Los Angeles, California, Contact Thomas K. McKnight LLP At (800) 466 - 7507 or Visit Our Website at TKMLLP.Com for a Free Consultation!