Debt Consolidation Loans - The Facts

A lot of us have heard the words Debt Consolidation but are confused about what they mean exactly and how a Debt Consolidation Loan might help. In todays world, with many of us struggling with paying high interest rates on our debts, such as mortgages, credit card, store cards, car leases and various other kinds of loans, it just takes one unexpected event in life like an illness or an accident for debts to start spiraling out of control and put extreme financial pressure on an individual and their family. Hence it is essential for you to know what your options are and how a Debt Consolidation Loan might be able to help, especially if your situation is so bad that it has had a negative affect on your credit rating.

So what is a Debt Consolidation Loan? To put it simply, its a special type of loan that allows you to convert or consolidate all your loans into one single loan. It involves combining all your debts and loans, whether you are up-to-date with payments or not, into one loan with a lower overall monthly (or fortnightly) repayment. A common circumstance is if a person falls sick and cannot work leaving their not so important loans like credit cards go into default. Just defaulting for one or two months is bad enough but if you let these defaults run up to 3 or 4 months or above, it is nearly impossible to catch up. Once you are in this situation, your credit rating will be affected and most traditional lenders would most likely refuse to loan you money. Repayment history being the single most important factor in deciding lending or refinancing potential.

Let us take a real life example which could happen to anyone:

David was a fully employed office worker in his mid-thirties on a salary package which comfortably supported his day to day expenses and that of his family including his month mortage payments on the family's home, car loans and minimum payments on his credit cards. Unexpectedly he developed a gall bladder problem which caused him to lose control of his bowels. Because of the nature of his condition, he was forced to take six months off work for treatment until he was fully recovered.

During this six month period with no income coming in, the family was forced to pay for their daily living expenses with credit cards. David was not in a position to pay his loans and defaulted on his mortgage and car loans.

His loans looked like the following:-

Mortgage: $202,000 at $1550pcm

Credit Card: $22,000 at $660pcm Also in default with debt agreement to pay $10,000 to close account.

Car Loan 1: $13,000 at $390pcm (3 months behind)

Car Loan 2: $29,000 at $900pcm (3 months behind)

The critical things to consider in this situation were:

- Bank was ready to foreclose on his home and both car loans

- Credit card company was willing to take 10k to close the account.

- Home Value: $330,000

- Total Loans: $ 254,000

- Current repayments: $3500

Upon his recovery, David assessed his situation and realized that it was impossible for him to try and pay off all his defaulted loan repayments, credit cards as well as interest and penalties etc associated with each of his loans. After being refused loans from a number of possible lenders and being faced with the possibility of losing his family home, David was advised by a close friend to approach a debt consolidation specialist.

Having looked at Davids loan particulars and record, the debt consolidation expert worked out the following deal for him:

Refinance all Davids loans into one facility.

Loan: $254,000

Repayment: $2438

David reduced his outgoings by nearly $1000 per month, but best of all now has all the lenders off his back. He is now able to put the past in the past and move forward.

Debt Consolidation Loans are saving various families like David's from losing everything they have worked hard for. It is hence imperative that if you are in a similar situation to know how a Debt Consolidation Loan could help you. Consult a Debt Consolidation specialist to get expert guidance on consolidating all your debts into one single debt for your future financial well being.

Colin Kidd is a specialist in debt consolidation loans for families and business. Colin Kidd is the director of Loan Saver Network and has been providing finance options since 1999. For more information on debt consolidation loans please visit http://www.loansaver.com.au

Availing Debt Consolidation Loans
Often people may find it difficult to keep up with many loans. Either they may be too busy that they miss the repayment schedules, or they may find that they do not have enough money to pay back the loans. Debt consolidation loans are taken out to co...

Debt Consolidation Loans - Dangers of Debt Consolidation
In America, the average household carries about $8,000 in consumer debt. This amount includes credit cards, personal loans, lines of credit, etc. Understandably, people are searching for a quick and easy way to eliminate unnecessary debt. Options for...

Debt Consolidation Loans - The Good, The Bad, and The Necessary
Are you in debt up to your ears and are you considering getting one of many debt consolidation loans? There are good loans for debts, bad loans for debts, and situations that are necessary for debt consolidation. Here are the good, the bad, and the...

Debt Consolidation Loans Non Home Owner
Have you gathered up a large portion of debt and you just cannot seem to get it under control? If you don't own your home it can be a bit difficult to get a debt consolidation loan. There are options for you though. Here are 3 debt consolidation l...

Debt Consolidation Companies In Kansas
A debt consolidation company is usually only approached when a person finds it difficult, to keep up with, the enormous accumulated debt payments. Financial companies have made it very easy to get a credit card or any kind of loan. Therefore, people ...

Debt Consolidation Confusion
Learning about debt consolidation can be quite a confusing venture for your average person. There is plenty of conflicting information to be found about debt consolidation. If you have explored debt consolidation as a solution to your financial str...

Give a Twist to Debt Management with Debt Consolidation Loan
Contrary to popular belief, debts are neither harmful nor are they vicious. On the other hand, debts are much required to lead a good and vibrant life. Debts are good because they help youto achieve your ambitions - educational loans to fulfill your...

Discover Relief Reducing Debt Through Consolidation
You can get financial freedom easily and cheaply through debt consolidation. With interest rates rising, it can be difficult to get a loan and repay it. Getting a debt consolidation is one easy way to fix this problem.Before you take the step of co...

Debt Consolidation Loans
A debt consolidation loan is one of several solutions that can help you become debt-free. The lending agency gives you one loan to pay off all your debt. If you are employed and have a reasonable credit history, you may be able to get an unsecured ...

Unsecured Debt Consolidation Loans, Pay It Once For Many
No home stake required for unsecured debt consolidation loans, not even collateral. You may be a tenant or non-homeowner having debts and the formalities will be handled by unsecured debt consolidation loans. And remember that the loan is availed not...