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The Definition of Debt Consolidation Loans

Author: Cole

There should be nothing simpler to explain than a debt consolidation loan. It is, just as you would imagine, a loan that consolidates debts. However, there are a number of different ways such a loan would be taken out. Many people attempt to themselves compile all of their various obligations into one single loan that pays back all of their creditors (well, all but one, obviously) while lowering the overall payment and interest rates. This is commonly does as a form of mortgage or equity loan. There are also Consumer Credit Counseling and debt settlement programs that involve an external firm negotiating for a reduction of rates or debts in exchange for a fixed a payment plan.

Also, more confusion arises over what precisely sort of debts could be successfully consolidated. While all specific questions can best be answered by professionals working within the debt consolidation industry, the consolidation program generally works best with unsecured notes like credit cards, credit lines, medical bills, and revolving credit accounts from retail stores. Since secured debts like cars or homes could be legally taken away by their lenders, they don’t tend to be included. Also, tax liens or criminal liabilities – since they can’t ever disappear from bankruptcy proceedings – aren’t typically to be the subject of consolidation, and monthly utilities such as water and electricity are only looked at for purposes of designing the debtor’s budget.

It’s still best to talk face to face with a professional in the industry before deciding whether or not debt consolidation would be the right solution for your family’s predicament. Every debt scenario is different, after all, and the rules change from state to state. If you have amassed consumer debt in excess of one quarter of the household’s annual gross income, it probably wouldn’t be a bad idea to go in for a free consultation at a debt consolidation office and find out the truth about your own situation. Debt consolidation won’t work for everybody, but a successful strategy for the elimination of debt would be beneficial for most Americans to investigate.

Article Source: http://www.articlesbase.com/debt-consolidation-articles/the-definition-of-debt-consolidation-loans-526091.html

About the Author

My name is Cole I am a professional in the financial fields of bankruptcy and debt settlement. For immediate debt relief visit www.totaldebtrelief.net