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Consolidation Loans With Bad Credit: 3 Ways They Can Improve Your Financial Position

Monday, September 29, 2014

As debt mounts, the pressure to repay them increases dramatically. But while the simple solution is obvious, the reality is that the ability to pay lessens as debts rise. The most practical solution? A consolidation loan, with bad credit borrowers getting the funds needed to clear their debts in one go.

Of course, there are other ways to get rid of debt, but not all of them have a positive outcome. Filing for bankruptcy, for example, can see the debt lifted with the minimal settlement payment made (often nothing paid) but it can affect your credit rating for up to 10 years. With the right debt consolidation program, however, the consequences are all positive.

There are several aspects to getting a consolidation loan that must be addressed if the program is to be as effective, but the advantages are significantly greater than any compromise that may have to be made. Here are just 3 of them.

1. A Clean Slate Through Consolidation

Consolidation is not about getting off paying your various individual debts, but is really about replacing them with a more manageable single debt. To this end, taking out a consolidation loan with bad credit is the most practical way to clearing the credit slate and starting again.

For example, if a person as 5 individual loans to repay each month, they have to manage 5 different repayment schedules, 5 different loan balances at 5 different interest rates. This can be a nightmare to manage, but with a debt consolidation program, everything is melted into one payment on one repayment schedule.

And with the slate cleaned, the pressure is lifted for the long term with the only obligation being to repay the consolidation loan each month, over the duration.

2. Free Up Extra Cash

It is one thing to lift the pressure of repaying mounting debts, but it is another to improve the living standards for the borrowers themselves. But even when securing a consolidation loan with bad credit, this is the outcome. How? Because it also frees up extra cash.

Typically, the problem with repaying the original loans is that there is not enough cash to hand to make the repayments. As the arrears build up, the situation worsens and eventually no payments can be made at all. Through a debt consolidation program, the total debt is restructured to lower the monthly obligations.

For example, if repayments on 5 loans amounted to $1,000, the lower interest rate and longer repayment term on a consolidation loan can see the obligation fall to just $500. That leaves an extra $500 to hand every month to cover other bills and expenses.

3. Restore Credit Reputations

While effective debt management is the key purpose behind consolidation, there is another positive consequence – restoring your credit reputation. This occurs because by securing a consolidation loan with bad credit, your credit scores rise.

Unlike other debt management initiatives, a debt consolidation program buys out all of the debts so they are marked down as having been repaid in full. This fact means that your credit score is increased, thus moving the borrower into the good credit range.

Perhaps more importantly though, the reduction in debt repayments means the debt-to-income ratio is improved too. And since this is the key factor in all loan approval processes, the consolidation loan can make a huge difference to future loan applications too.

How To Identify The Best Colorado Mortgage Companies

Saturday, September 27, 2014

Several places are available for obtaining mortgage rates from different Colorado Mortgage companies. Look at the ads or scour the advanced engines online and you will find many companies offering different rates in your area. Try to find one in the state of Colorado when you are looking for the best Denver refinance rates. The homes in and around Colorado are unique and offer homes that range from modest to luxury.

First, try to find a Mortgage company that offers quotes that spell low interest rates. However, just because the company offers low rates does not mean that they are the best. It is important to ascertain that they have a reputation in the area and are not out to take your money by luring you with false quotes. You should start by examining the fees charged for the mortgage loans. Each company offers different closing costs which you should note. The terms and condition of Colorado Mortgage companies differ and therefore you should be able to make your final decision after studying these points and making comparative notes. The company you select should have excellent customer service and answer all your queries. They should be experienced in the field and help you understand the rates and quotes that are offered.

Refinance is the term that refers to the replacement of a current home loan debt with another obligation of debt with different terms. People do this to either extend the length of the repayment period or to change the existing parameter. People may prefer to pay the Denver refinance rates if their present agreement involves adjustable interest rates. Due to various reasons such as economic turmoil, the interest rates may fluctuate and this affects the mortgage interest rates. This may cause someone in Denver to refinance the adjustable rate mortgage and make it a fixed rate to enable them to pay the amount determined beforehand on the mortgage.

If you plan to live long in your current home in Denver, then you can use this option of refinancing. Call your mortgage counselor and ask them for their valued advice and guidance. They will explain the benefits and disadvantages and help you make the right decision. People in Denver are now refinancing their mortgages in the hope of getting a lower rate. Some people may use their mortgage on their property in Denver to consolidate debts. They may be able to transfer their debt from a high interest rate to a lower interest rate and save money.

There are many reasons to refinance the mortgage but it is important to know the different options and consider the pros and cons when taking one on the Denver home. Beacon Financial is a private company that arranges for loans, using money of others. They offer exceptional service and great rates including low closing costs. This is why you should select one of the best mortgage companies in Colorado to help you make a vital decision on Denver refinancing.

How Unsecured Credit Card Debt Can Be Cleared Through Consolidation

Thursday, September 25, 2014

There are plenty of things we would rather do than worry about loans and bills. It might be vacationing through Europe, or charity work in Africa, or hitting the road on a coast-to-coast tour of the USA. But whatever it is, the debt we have built up is ruining such plans. Clearing debt, especially unsecured credit card debt, is possible, and consolidation offers the best solution.

It never fails to amaze people how easily credit cards bills can get out of control, creating a debt that is nothing short of crippling. But it is comforting to know that it is possible to alleviate the situation regardless of how bad the situation has become. Even getting debt consolidation with bad credit is a realistic target.

And with unsecured credit cards providing the majority of debt in the typical American household, the most positive impact that can be made on debt management is a consolidation loan that replaces the troublesome terms with something far more manageable.

What Is Consolidation

Consult the dictionary and consolidation is explained as the bringing together of a number of elements in order to create a stronger position. It depends on the context, but the concept is there. When it comes to clearing unsecured credit card debt, it is a matter of bringing all of the individual card balances together so as to pay them off in one go.

With the average American having 4 credit cards, and combined credit limits of $30,000, the job of managing these credit cards can be a serious task. Each card has different interest rates, and different late fees, so the size of the debt can become large very quickly.

Even when opting for debt consolidation with bad credit, it is possible to get a fixed sum of $30,000 to pay off the debt created by the unsecured credit cards in one simple payment. And replacing it with a single loan repayment over a longer term makes the debt easy to pay back.

Advantages Consolidation Provides

There are several advantages to using consolidation loans to clear unsecured credit card debt, not just the fact that the debt is removed in one go. For a start, the credit rating of the debtor is immediately improved.

Another is that the job of repaying the new consolidation loan is made easier by the terms of the loan. For example, the debt may still be $30,000, but the sum can be repaid over 10 years. This means that monthly repayments of just $265 are needed to pay off the sum. So, even when opting for debt consolidation with bad credit, the financial pressure is alleviated greatly.

However, the advantages enjoyed depend on the terms secured, the total debt to be cleared and the source of the debt consolidation loan. This means that despite the benefits of paying off your unsecured credit cards, there are some issues to consider.

Your Consolidation Source

There are two main sources of a consolidation loan: firstly, a general loan provider, whether traditional or online; and secondly, from a dedicated debt consolidation company. When considering the best to use to clear your unsecured credit card debt, it is important to understand the difference.

From a regular lender, a consolidation loan is usually available at competitive terms but when trying to get debt consolidation with bad credit, there may be issues over the size of the possible loan. This creates a problem if the debt is very high.

However, a company will take on larger debt on you have, and even negotiate a final settlement sum with your creditors. In return, they will charge a fee as well as accept monthly repayments at a competitive interest rate. Either way your unsecured credit cards are paid off and your financial status improved.

Debt Settlement Programs Or Bankruptcy: How To Choose Wisely

Sunday, September 21, 2014

When managing debts becomes too much, a choice needs to be made. Should a file for bankruptcy be made, or should one of the debt settlement programs be applied for? This is a choice that needs to be thought over deeply before any move is made.

The reason this decision is not that simple is that there are serious repercussions to choosing bankruptcy, and even if that is the only logical option, there are a number of bankruptcy chapters under which debtors can file. Increasingly, a Chapter 13 bankruptcy plan is becoming the preferred option, but other chapters are 7, 11, 12, and are just as efficient in ridding oneself of debt.

However, while debt settlement is more expensive and less damaging to credit histories, they do not always turn out to be the saving grace that applicants would like them to be. So, when clearing existing debts, which of the two is the right one to choose?

Check Your Own Status

The first step in ascertaining the best choice is not to look at the options, but to look at yourself. Depending on your credit and financial status, either bankruptcy or a debt settlement program will provide the most effective solution. And reading your credit report is the starting point.

Once the true extent of your debt problem is confirmed, it is possible to work out what the right debt relief option is, based on what kind of deal is affordable. When debts are slightly greater than income, then a Chapter 13 bankruptcy plan is likely to be the right choice. When it is very much greater, Chapter 7 might be the most plausible choice.

However, if there is still some income more than debts, then a settlement deal is likely to be affordable. The complication is that, while a settlement involves clearing existing debts for a fraction of their worth, it still requires a lump sum payment to complete the deal. Saving up that lump sum is the problem.

Terms of Bankruptcy Chapters

There are four chapters to the Code of Bankruptcy that any bankruptcy case can be filed under: chapters 7, 11, 12, and 13, The key differences between them relate to the extent of the poor financial situation an applicant has, and the likelihood that a debt settlement program cannot be approved.

Chapter 7 is filed by those seeing liquidation or straight bankruptcy where debts are completely written off. The other options relate to reorganizing debt, with Chapter 11 filed by businesses seeking to reorganize their debt, but not to liquidate. Chapter 12 is applicable to family farmers seeking to reorganize.

However, a Chapter 13 bankruptcy plan is sought by individuals who earn the average income or higher in the state the case is filed in. The court decides on the terms of the debt reorganization, and continuously monitors the repayment progress. So, clearing existing debts is done under strict conditions.

Bankruptcy or Settlement?

The basic deciding factor is cost, with the fees associated with a debt settlement program almost double that of the costs of filing for bankruptcy. But there is also the matter of monthly repayments and other terms associated with the type of bankruptcy. If the Chapter 13 bankruptcy plan is more affordable than the settlement plan, it makes sense to choose the former.

But the consequences of the decision need to be considered too. For example, clearing existing debts through a settlement plan will reduce a credit score by around 50 points, but bankruptcy cuts it by a minimum of 200 points. And it will be on your record for 10 years, while with a settlement plan, credit is returned after 2 years.

Debt Consolidation Loans With Bad Credit: Solving Financial Woes In One Fell Swoop

Wednesday, September 17, 2014

The pressure created through quickly mounting debts can cause real chaos. It does not take long for creditors to begin to demand payment, and unless something is done to deal with the problem, bankruptcy becomes a real possibility. So what is the solution? Well, it is not difficult to secure a debt consolidation loan with bad credit, and to clear the troublesome debts in one go.

The challenge of clearing existing debts, and lifting the weight that can cripple even the hardest working of us, is no light matter. It usually requires great discipline to take control of debts, making it extremely difficult to achieve independently.

A precisely tailored consolidation plan can make a real impact, and a debt consolidation loan provides the means to restructure the money owed into something that is manageable to handle. But how is this possible, and what are the terms that should be sought?

How Consolidation Is The Answer

Applying for a debt consolidation loan with bad credit is a good decision, but it may seem strange that a new loan can actually make your debt situation better. Knowing how consolidation works is the best way to ascertain the effectiveness of the strategy. In its simplest form, consolidation replaces multiple debts with a single loan, thereby removing the complexity and lessening the burden.

The biggest problem with multiple loans and debts is that they each have their own terms. So, 5 loans will have 5 different interest rates and 5 different repayment dates. That means the amount of interest is higher than it needs to be, but clearing existing debts with a single loan means a single interest rate is paid.

And even the principal if the debt consolidation loan is $50,000 to buy out the individual loans, the terms can be much better than those original debts combined, making it much more affordable than the original deals.

What Terms Should Be Sought

Of course, applying for a debt consolidation loan with bad credit is one thing, but securing terms that make it worthwhile is another. By and large, lenders offering consolidation packages are willing to offer very flexible terms, but the key issues are the interest rate and the loan term.

The interest rate can be quite low, but what is most important is that the rate is significantly lower than the average rate charged on the existing loans. That way, clearing existing debts and replacing them with a new loan can be accomplished while making savings - as much as 50% on monthly repayments.

Crucially, however, it is the size of the loan principal that makes the biggest impact, and this is where the loan term comes in. With 5 loans to pay each month, the total sum could easily reach $1,500, but even a $50,000 debt consolidation loan repaid over 10 years could be half that amount. The longer the lifetime of the loan is, the lower the required monthly repayment.

Considering a Consolidation Company

When it comes to applying for a debt consolidation loan with bad credit, there are two chief options. The first is to approach a lender (traditional or online) and apply for a loan large enough to clear existing debts. While securing a large loan might be difficult usually, if the purpose is known to be debt consolidation, approval is more likely.

However, there is no guarantee of approval and this means that the problems might only persist. Another option is to approach a debt consolidation company, professional service providers who will buy out your debt and then receive monthly repayments directly.

Of course, this option is a little more expensive as there are fees to pay on top of interest on the debt consolidation loan. Still, the cost is manageable, and progress in lifting the debt is certain to be made.

By: Mark Venite
 

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