If you're struggling to pay your student loans, government debt consolidation programs may be a useful option. Most federal loans are eligible for direct consolidation, including Direct, Stafford, Perkins loans and more. Banks, credit unions, and installment loan lenders can offer debt consolidation loans. These loans convert many of your debts into a single loan payment, simplifying the amount of payments you have to make.
These offers may also be for lower interest rates than what you are currently paying. Government debt consolidation programs are a great option for many people, but not necessarily for everyone. Options include debt settlement plans, debt consolidation loans, debt management programs (DMPs) and, in the worst case scenario, bankruptcy. When used for debt consolidation, you first use the loan to pay existing creditors and then you have to repay the home equity loan.
If you have multiple credit card or loan accounts, consolidation can be a way to simplify or reduce payments. In addition, if debt problems have affected your credit rating, you probably won't be able to get low interest rates on the balance transfer, the debt consolidation loan, or the home equity loan. There are several ways to consolidate or combine your debt into one payment, but there are a number of important things to consider before moving forward with a debt consolidation loan. We offer a lot of information about online credit counseling, as well as information on the advantages and disadvantages of a debt settlement agreement.
With non-profit debt consolidation, agencies offer free credit counseling sessions and then offer options on how to resolve your specific debt problem. Many of the low interest rates on debt consolidation loans can be “preliminary rates” that only last a certain amount of time. They work directly with your creditors during the process, and while you should ideally pay less for your loans each month, you'll have to pay the provider's administration costs. Debt consolidation involves combining several debts, such as credit cards or other loans, into a new debt to basically pay off the old debt.
Consumers can work with a certified, highly trained credit counselor or debt counselor to understand their financial situation, consider ways to consolidate credit card debts, and develop a plan to pay off their debts for good. The loans you apply for to consolidate your debt may end up costing you more in fees and higher interest rates than if you just paid off your previous debts. Debt consolidation means that your various debts, whether they are credit card bills or other loan payments, are bundled into a single loan or monthly payment.