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At some points of life, for many people debt sounds no less horrible than a nightmare. Almost everyone has to undergo a tough debt situation where they have to deal with a lot of financial planning. Debts become a burden when we fail to pay the premiums of the loan repayment at the right time. It also gets difficult to deal with when we make random credit card purchases without having any planning or ideas about our expenses. Financial planning is always important. However, in some situations planning would seem to be futile. In a lot of emergency situations, we have to make heavy expenses like the medical expenditure of family members, accidental treatments and many more.
The Concept of Debt Consolidation
There are different ways of consolidating debts, and those ideas shall be discussed below. But, before going to that the concept of debt consolidation has to be understood. Nevertheless, the relation between debt consolidation and credit repair should also be understood. Debt consolidation refers to a process of dealing with debts. Imagine that you are struggling with the burden of debt. The first thing that would come to your mind is to consolidate the debt. In other words, you need to get rid of debt. Want to know more from nationaldebtrelief.comabout the concept of debt consolidation? For that, one can follow the steps that have been discussed below.
Some Debt Consolidation Ideas or Steps
Majorly, there are two ways of consolidating debt, and these ways are discussed below.
- Debt Consolidation Loan: The easiest way of settling debt is to opt for a debt consolidation loan. This loan is recommended for those who are facing a heavy burden of debt. If you have made heavy financial expenses recently with your credit cards, you may have some problems in paying the credit card bills. The simplest way of paying credit card bills is to opt for a loan. With this loan, you can pay the pending bills for your credit card purchases. So, it actually gives quick relief. However, it does not give you complete relief, as you still need to plan to pay the loan premium on a monthly basis.
- Debt Consolidation Program: With the debt consolidation program, people learn about different aspects of repaying their debts. The program helps people to do better financial planning. It is completely different from debt consolidation. It is quite unique as well as an effective way to manage the crunchy situation when the burden of debt thrashes you.
Debt Consolidation and Credit Repair
Debt consolidation and credit repair are interlinked. Credit repair is important for everyone, as it is essential to possess a good credit rating. If a person possesses a good credit rating, he or she will be more successful with the debt management process. With good credit rating, it is possible to get loans with a low-interest rate. As a result, it helps the person to attain easy loan repayment. A good credit score is necessary to find loans from banks. If your credit score is bad, your loan application will be turned down. A bad credit score is generated when you do not pay the credit card bills on time. When you do not pay postpaid bills on time, your credit rating starts dropping. As a result, creditors will lose trust when it comes to lending you money.
Debt consolidation process can have a lot of impacts over the credit rating. Hence, we shall analyze those potential impacts in the following section.
- The most important thing is that debt consolidation helps you to get rid of the burden from your shoulder. It helps you to manage debt easily or seamlessly. As a result, credit score remains good. Nonpayment of debt repayment premiums or credit card bills on time will lead to a poor credit score.
- Debt consolidation helps to pay all your remaining credit card bills. As a result, credit score maintaining agencies find this as a good move by the creditor. The agencies add good score when all due debts have been cleared in the short time span.
- Debt consolidation helps you from opting for the last resort of releasing the burden of debt, and that is a declaration of bankruptcy. If you are declared as bankrupted, the credit score will fall drastically and from there the score is difficult to be improved.
Debt Consolidation Lawyers
Instead of consulting a financial advisor, people like to consult a professional lawyer for the purpose of debt consolidation. The reason is that debt consolidation law is difficult to understand and could be complicated in certain situations. In such scenario, lawyers shall provide the best legal suggestions instead of the financial advisors or experts. There are a few legal advices that you should obtain from the debt settlement lawyer. Here are those suggestions at a glance.
- Knowing Your Rights after Debt Settlement: After you have consolidated debt, you have your rights covered by the "Fair Debt Collection Practices Act." According to this law, the debt settlement should be perfectly listed on your credit report. When you go for seeking a loan to lender next time, you can be assured of the fact that the lender is bound to follow all legal provisions before lending.
- Bankruptcy after Debt Settlement: Whether you are successful in debt settlement or fail in this process, you can always opt for declaring yourself bankrupted. For bankruptcy declaration, legal consultancy is important. It will help you to understand the legal aspects of the debt consolidation law and bankruptcy. Based on the suggestions of the lawyer, you can make the right choice.
Debt Settlement law also varies from one state to another in the USA. In some states, laws are a little simplistic as well as friendly towards the debtors. On the other hand, some states are quite strict about the right of the lenders or credit card companies. The loan is defaulting, or nonpayment of credit card bill will lead to punishment under the law of the state.
In conclusion, it has to be stated that debt consolidation is a process which should be done with step by step measures. There is nothing to hurry in this process. Nevertheless, to understand legal aspects, debt settlement lawyers should be consulted.