What Is Accelerated Debt Consolidation?

If you are covered head to toe in piles of debt, accelerated debt consolidation could be the best solution for your debt dilemma.

Almost everyone faces this situation at some or another. Most people take one of several ways of getting out of this debt trap: they join a credit consolidation program, which counsels them on credit management; or they apply for debt consolidation, which refreshes their current finance management plan and puts them up for a brand new, custom financial plan.

If you have a relatively bad credit score and unmanageable, massive debts, accelerated debt consolidation is probably your best option.

Accelerated debt consolidation is similar to other regular debt consolidation programs. The only difference is that it separates the two kinds of debts: unsecured and secured debts. All unsecured debts are included for consolidation by the accelerated debt consolidation; whereas none or some secured debts will be included.

Unsecured debts are contracts with your creditors to repay them for credit borrowed that do not include collateral. Some of the most popular and frequent examples of unsecured debts are credit cards and personal loans.

Secured debts, on the other hand, are loans or finance packages that force you to offer collateral in exchange for a certain amount of money or credit with the agreement that you will repay the loan. Some types of secured debt include mortgages, car finance, and loans on personal property. If you fail to pay your creditor in this case, you will lose your car or house or property.

Most accelerated debt consolidation programs will not include your secured debts; they will only take your unsecured debt.

If you are currently in trouble with your creditors and may need to apply for debt consolidation in the future, you should keep this in mind. If you accumulate too many secure debts, you will have a much harder time applying for debt consolidation, especially if you want to get faster plans and lower rates through an accelerated debt consolidation program.

What Is A Debt Free Consolidation?

Debt free consolidation does not add a new loan to your existing debt. Rather, it combines your current debt into one lump sum amount, thereby making it cheaper, manageable, and stress free. After initiating the debt consolidation process, the monthly payments become lower and more cash is freed up in the monthly budget. Cash can then be diverted towards savings that will help the borrower stay debt free.

Debt free consolidation is meant for those who are unable to meet their monthly debt obligations but whose debts are current. It works for people who have not fallen behind on repayments by not more than three months. Those borrowers whose unpaid dues do not exceed three months at a stretch and who skip payment to one creditor to pay another will benefit the most from this debt free consolidation. Others will find it difficult to find an effective debt free consolidation plan.

There are several places debtors can obtain debt free consolidation services. The best place to start is with the bank or credit union with which an individual is already doing business. Since the client is aware of the credentials of the organization, he will not need to exert to much extra effort.

And that bit of extra effort can help you find whether or not the institution is trustworthy or not.

Furthermore, with the spread of the Internet, there are many companies that advertise on the Internet. Researching these companies is very difficult and hence, it is important to be completely satisfied before committing to any particular organization. Utilizing the services of these companies is most convenient, as debtors can get advice and service without even leaving the confines of one's home. One can view the options available and compare them with other such companies with utmost ease. Debt free consolidation stops the annoying collection calls and help you start afresh.

By making use of debt free consolidation, you will radically increase your chances of attaining financial freedom in the near future.

Is Debt Settlement Superior To Debt Consolidation?

It has always been a matter of competition for both the debt consolidators and debt settlement companies to prove themselves over each other. But somehow debt settlement has managed to stay ahead in this race of oligopolies.

What are debt consolidation programs?

Debt consolidation programs give you a loan to help you manage your way out of debt by allowing you to pay off your earlier creditors.

You are charged interest on it and at times even to your earlier creditors. Your principle amount remains the same, but you are still kept far away from clearing your debt.

In short, you don’t get to experience a debt-free life for a significant amount of time; and by the time you do, you no longer have a life.

This is why most people choose debt settlement over debt consolidation.

What is debt settlement?

Debt settlement, on the other hand, is your rescue ship if you are drifting toward bankruptcy. If you are already in bad standing with your creditors and your credit rating is low due to a lack of payment history, then joining a consumer debt relief group can be the best way to modify your debt to income ratio and stabilize your account ratings.

Looking at this new status of yours, where you have cleared your past debts with the help of debt settlement program, your future creditors will hold you in consideration.

And this definitely saves you from facing bankruptcy, which really should be your last option if you are in debt, as it is so damaging to your credit score.

The bankruptcy tag accompanies you for a very long time--almost seven to ten years after your filing for it. This takes away your financial freedom and books you as unreliable in the eyes of creditors. And this is precisely why debt settlement will provide you with a better solution than debt consolidation.

Generation debt: more college graduates owe money after college

Whether you're currently in college or a recent graduate, you've probably got your mind on your finances, so much so it seems like you're majoring in debt.

More Americans are attending and leaving college in debt, according to reports released by the Democratic Policy Committee, the National Conference of Bankruptcy Judges (NCBJ) and the Project On Student Debt, who also say in 2004, two-thirds of four-year college graduates had student loan debt, up from less than one-third in 1993.

Reportedly, compared to a decade ago, more people are borrowing large amounts to pay for college than they ever have before, even after accounting for inflation. In 1993, 1.3 percent of graduating seniors with student loans owed at least $40,000 (in 2004 dollars). In 2004, 7.7 percent owed $40,000 or more.

Getting snared in debt while borrowing money for higher education is bad, but coupling it with credit card charges is worse, according to the NCBJ, which says that college students often are solicited by credit card companies during their registration.
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More than half of today's college freshmen owe over $1,500 in credit card debt, states a survey by an educational lending company. It also indicates that the balance will more than double by the time those students are seniors because interest charged for credit card debt typically is far higher than that for student loans.

And according to a report from the State Public Interest Research Group's Higher Education Project, students from lower income households are more likely to graduate from college with debt. In 1999-2000, 71 percent of students from households that make less than $20,000 graduated with debt.

It's that debt, says the committee, that causes students to delay buying a home or a car and to postpone marriage or starting a family. Experts agree that while a complete solution is not readily available, a little common sense can go a long way.

Don't abuse credit cards. Having some credit isn't bad in itself. Using it frivolously and not paying off the monthly balance is financially reckless.

Pay on your student loans: OK, something like this may seem obvious, but you can only be in forbearance or deferment for so long before the collected interest starts to get a little stifling. And not paying your loan while going into default isn't something you want to do. Plus, some of the payments are tax-deductible.

Get professional business advice: Financial planning before, during and after attending a college or university is crucial to your future (and mental well-being, for that matter).

COPYRIGHT 2006 Johnson Publishing Co.
COPYRIGHT 2006 Gale Group

How Effective Is Debt Consolidation with Credit Card?

People who are seeking to establish credit will often apply for a major credit card or for a personal loan. On the other hand, people who are in debt will often apply for credit cards, believing it is a solution for debt consolidation. In both instances, the people in the scenario are both risky candidates for getting a loan. If you do not have credit, it can be just as difficult to get a loan as if you had bad credit. Credit is necessary these days, which is why you should work on building it before you actually need it for something important.

Regardless of the situation, you must stay on track if you find a way to consolidate your debts. Once you begin the process of debt consolidation, you must keep track of your money, spending, and so forth. When you keep track of your money and spending, you are taking the first step to consolidate your bills and manage your money at the same time.

Credit cards are nice to have; in fact today, credit cards are essential, as you cannot make purchases in some instances if you do not have a major credit card. Pre-paid credit cards are newer cards that offer a similar effect to credit cards. The cards allow you to deposit your money into the card and use it as though you had a major credit card. The downside is that these cards have fees and this will not help you to consolidate your debts. It is possible to get a credit card if you have bad credit, but it may come at a costly fee. The interest rates are often higher than on cards given to individuals or families without credit problems. So if you are bent on getting a credit card to consolidate your debts, think again; if you don't, you could end up in more debt!