Debt Consolidation as a Debt Solution

Consumers have been scrambling recently in efforts to have their unsecured debt in check. This toxic debt consistently drains away hard-earned income, something they can ill afford through this challenging economy. The main culprit is generally credit card debt, but can include other forms of unsecured debt, such as personal or “signature” loans. Credit card rates can actually reach 29.99%, although it is a bit more common for them to be in the 18% range. For a better perspective on the insanity of paying these types of rates, just consider that 1% is about the rate that could be anticipated to earn on a savings account. Being conscious of the need to bring about some significant change, most consumers have now either already taken steps toward credit card debt relief or are in the process of deciding exactly how they should proceed with it. All those who have not yet moved forward with a specific debt solution would do well to consider acquiring the benefits of some kind of debt consolidation.

Qualifying for a financial loan at a lower rate that could be utilized by consumers to consolidate the unsecured debt was possible not that long ago. Since the recession, though, dramatic changes have taken place in the lending industry which have made these loans nearly unattainable. The primary method now utilized by consumers to gain access to the advantages of debt consolidation is through a credit card debt relief company that offers either credit counseling or debt settlement services. The processes of each of these debt solutions make use of the benefits of debt consolidation, even though in practice there remain big differences between the two of them (debt settlement being riskier). Consequently consumers are able to make a single consolidated monthly installment at a lower interest rate on their debt. Individual debts were repaid and combined in the new loan in the prior traditional method of credit card debt consolidation: obtaining a loan directly from a lender. In handling the consolidation process through a credit card debt relief company, the debts themselves in reality remain separate. It becomes the responsibility of the credit card debt relief company, which now receives the consolidated payment from the consumer, to appropriate the appropriate portion of the consolidated payment to the individual creditors.

Mortimer Hudoba is an experienced debt analyst for a reputable credit card debt relief company. He also regularly writes about debt relief help.