Loan Debt ConsolidationDebt Management | May 11, 2010 at 4:27 am
Most of those with serious debt seek help from debt consolidation companies and avail a consolidation loan to eradicate grave consequences. It is, however, very likely that this loan to eradicate debt can turn into a debt itself. A debt consolidation loan can become loan debt consolidation as well. And if such situation arises, you probably have very limited sources to approach, within limited time.
For people who are unaware about how debt consolidation, take a few seconds to know about. When you consolidate or combine all small loans into a bigger one, it’s debt consolidation. You don’t have to bother about due dates and repayment issues of every creditor individually. Pay just one bill in a month, and the proceedings would be taken care of by debt consolidation companies.
So, how would it become a consolidation loan debt?
Most people find it quite convenient to switch to an easier repayment option i.e. debt consolidation loan. A common way to avail such loan is using your house equity against it. If you, however, don’t repay your loan, banks have the required rights to confiscate or foreclose your house. So their loan is secured. This is they only reason why they are able to replace your high interest loans into single, low interest one.
You, not aware about future consequences, move all your unsecured loans like credit card debt, revolving debt and so on into a single huge loan. If you repay the loan amount on time, without missing out payments, before the pre-determined tenure of loan, you will benefit from it.
However, there are many people who don’t have control over their spending. In spite of having such a huge loan to repay, they keep spending their income on trivial things, least bothered about the repayment of debt consolidation loan, which is turning into a loan debt consolidation.
If they fail to repay the loan amount, their house would be confiscated by the bank or other financial institution. They would then be in a position worse than ever, with nothing they own.
Hence, before you seek a loan debt consolidation and take it for granted, it’s crucial to know about the consequences it could lead to.