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Americans have staggering amounts of debt; it only stands to get worse
Americans have staggering amounts of debt; it only stands to
get worse
If you're like most Americans, you owe a lot of money to a lot
of people. In years past, credit was hard to obtain, and if you
needed cash, you had to go to the bank and...
Debt Consolidation – Discipline is Required if Consolidating with Home Equity
Debt consolidation is a popular topic these days. The average American carries nearly $10,000 in credit card debt and credit card debt of $100,000 is not all that unusual. New legislation that takes effect in October 2005 is going to make it harder...
Unsecured Consolidation Loans: Dependable Option Without Security
Are you stuck in debts that have outgrown your financial capacity? Then it is time for consolidation of loans. If you are not likely to offer security for consolidation loans then your search should start with unsecured consolidation loans....
Debt Consolidation for Americans
Times are hard for many Americans, with interest rates going up,
sky high gas prices, and overall inflation, so it's not
surprising that many families find themselves in financial
difficulty that's frightening enough to cause them to seek
professional help.
When faced with mounting financial obligations, it's easy to
fall prey to any number of the advertisements you see on
television, in magazines and newspapers, on the radio, in your
email box, or on the Internet, promising to either eliminate
your debt altogether--or to "consolidate" your debt. In this
article, we're going to look at how the debt consolidation
process works.
It's a tempting thing to have a company take all your bills,
roll them into one package, and then have you pay them off with
one lump monthly payment, often less than the combined total of
your individual bills. But let's look at what's really involved.
The pitch is that debt consolidation companies will reduce your
monthly payment on what's known in the industry as UNSECURED
DEBT, which includes credit cards, utilities, or anything else
you bought that wasn't secured by a piece of property that could
be foreclosed upon by the lender. Your home mortgage, on the
other hand, is a secured debt, which is the key to how debt
consolidation companies function.
When you contact a debt consolidation company, the first thing
you'll find yourself doing is answering a number of questions
concerning your home--how much equity you have, your monthly
payments, how long you've been in the home, and other things.
Since your home mortgage can (and often is) the largest monthly
payment you have, you might be lulled into thinking that they're
merely asking in order to add your house payment into your
monthly debt total.
However, there's something potentially ominous behind those
seemingly innocent questions. The
company is asking questions
about what's generally the most valuable asset of a
family--their home. Why? Because their plan is to combine all
your unsecured debt and turning it into SECURED debt--by tying
it to your home.
There are several potential dangers involved in that. First, if
you find that you can't make the new, lower payments in the
future, you'll find yourself not only continuing to have bad
credit (which is something that you could ultimately live with,
even as difficult as it would be). But you could actually find
yourself losing your HOME, as well--a situation that could be
life-threatening!
But debt consolidation companies say they can lower your monthly
payments by a significant amount, and that's why you sought
their help, right? Well, your must understand that the debt
consolidation company won't lower either your overall debt load
or interest rates. What they'll do is extend the life of your
loans by transferring them from short-term (1-3 years) into
long-term loans, which can take as long as 30 YEARS to pay off.
You may lower your monthly payment, but you'll be paying up to
THREE TIMES as much for those things you owe money on--for
DECADES to come!
So, regardless of how much debt you're faced with, be smart, and
before you sign with a debt consolidation company, ask them
EXACTLY how they plan to help you, how long it will take to pay
off your debt, and what they'll get out of it, since they're in
business to make money, just like every other company in the
world.
Copyright © Jeanette J. Fisher
About the author:
Jeanette Fisher teaches how to get out from under credit card
debt and how to use credit to make money. Free ebook "Credit
Tips" http://worryfreecredit.com
Written By: Jeanette Joy Fisher