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Debt consolidation is the act and process of taking out one loan to pay off many other loans and bills like credit card bills or student loans.

The main aim of debt consolidation is to basically reduce the total amount of loan repayment through interest rate reduction.

Many debt consolidation companies, programs and services have argued the benefits and advantages of debt consolidation when one is in cycle of debts. But the question is:

Is debt consolidation really useful in helping people get out of their debt problems?
While I agree that debt consolidation can help debtors solve their debt problems, many debtors really have much difficulty to get out of their debt problems even after they consolidate their debts.

Why is that so??
Think about it - Most of these debt consolidators are in debt problems because they spend on credit and are used to spending more than they can afford to. As such, they eventually run into debts in the long run since they are always spending more than they earn every month.

After debt consolidation – these debt consolidators will have their credit card balance clear and a single monthly loan payment (with extended repayment period).

With a lighter loan repayment amount, most of these people will begin to relax and usually over spend on their monthly budget again in the near future.

By doing so, they will eventually run into debts again. Thus, it is not surprising to see many people who have had consolidate their debts before to run into debt problems again.

How does one get out of debts?
Debt consolidation is a tool to help debtors get out of debt problems. Unfortunately, many have used it to increase their debt problems as mention above.

The only surefire way to get out of debts is really to adjust your spending habit and commit to a discipline lifestyle. If you ask me, the get out of debt formula is really simple:

It’s either to earn more money or spent less money.

Moses Wright is the webmaster of Bulletpedia.com. He provides more helpful information on debt and bill consolidation tips, personal finance credit help and personal finance loan help that you can research in the comfort of your home on his website.

Mr. Henderson would often think of times when he had a good credit history and there would be a long line of loan providers desirous of offering debt consolidation loans. Things took a sharp turn after he underwent a few defaults and CCJs. This was enough to demonstrate to loan providers that he was not credible enough to be lent on regular terms.

The differences in terms allowed on bad debt loans in contrast to regular debt consolidation are starkly noticeable. However, Mr. Henderson is not complaining. The attitude of Mr. Henderson will appear shocking to some individuals who are not aware of the risk that bad credit history brings with it. Bad credit history results because of borrower’s failure to pay debts on time. What starts as a simple default, turns into County court Judgements and bankruptcy in the worst of circumstances. The reason put forth by loan providers is that borrowers, who defaulted once, can default again. Thus, higher interest rate and stricter terms on bad debt loans are justified.

Mr. Henderson has accepted his status and is ready to pay for the differences in terms as long as they are reasonable and match with terms charged by principal banks and financial institutions for a similar set of circumstances. Mr. Henderson has not left hope of getting a good deal, though the definition of good deal may have changed a bit. Bad debt loan borrowers will be advised to have a similar point of view while searching for such loans. A relaxed attitude on bad debt loans will give lenders the freedom to further extend interest rate.

The first step in searching Bad debt loans is to check how worse is your credit score. The document is not to add to your lamentations. Nevertheless, credit report will give important details about when and where you faltered. Many a times, credit reports sport unsolicited items that you were not party to. Having them changed may result into a substantial improvement in the credit report. Borrowers can get credit report from credit reference agencies (Experian and Equifax) either for free or by paying a nominal fees. Borrowers can approach these credit rating agencies for deletion of the unsolicited items. The credit report details can be easily quoted in the application form for a more specific loan quote.

The second step will be to search loan providers who are ready to deal with borrowers with bad credit history. The process can be simplified, particularly through online lending system. Almost every loan provider has his website describing the organisation and the various financial products and services that they deal in. Loan providers who extend their services to bad credit borrowers would have it written in bold on their website. The loan providers who do not will immediately be ousted off your list. Online search for about an hour can help create a big database of lenders who deal in bad debt loans.

The third step in the process will require working on the list prepared in the second step. The aim of this step is to select one particular loan provider to affect the bad debt loan. Loan quote is an important method employed at this stage to compare the terms of different loan providers. Depending on the results of the comparison, borrowers will decide on a particular lender. It will be beneficial if borrower meets the lender in person once.

The third step ended with the final choice of lender. Henceforth, every debt settlement discussion will have the participation of the chosen lender. This is what the fourth step involves. The process of eliminating debts through bad debt loans is no different from the regular debt consolidation process. After preparing a list of debts on the borrowers account, the loan provider will undertake to settle them personally. Negotiation for a lower disbursal of debts will be a regular feature of bad credit debt consolidation loans. The fourth step is witness to the final elimination of debts.

The process of debt settlement will be incomplete without the borrower drawing lessons from the thing. Borrowers must understand that unrestrained expenses will again create a mound of debts to be cleared. Debt consolidation loans will not be the viable solution every time the debt burden increases. A more feasible solution to debts will be to control the incidence of debts. An immediate use of the advice can be made in a timely repayment of monthly repayment on bad debt loans.

James Taylor holds a Master’s degree in Commerce from JNU he is working as financial consultant for chance for loans.To find a personal loan,bad credit loans that best suits your needs visit http://www.chanceforloans.co.uk

Outlined below are some of the benefits and drawbacks of bankruptcy. It should be noted that bankruptcy is not to be entered into without first having sought professional advice.

There is more to bankruptcy than as a way of finally putting an end to harassing debt collectors and creditors. One big side effect of bankruptcy being that your life is likely to be subjected to intense scrutiny.

These are some of the benefits of bankruptcy:

Relieves the stress caused by dealing with numerous creditors.

Once a bankruptcy order is made, a third party takes over the administration, decision making and payment process of the debts.

Creditors forced to recognise that they must accept less money than is owed.

Debtors typically pay less with a bankruptcy order than with an Individual Voluntary Arrangement.

Once discharged, most debts are written off and creditors cannot pursue them.

Here are some of the drawbacks associated with bankruptcy:

The debtor will lose any realisable assets of value.

If the debtor owns equity in a home, this will almost certainly be sold.

If a business is owned, this could be sold and any employees dismissed.

Bank current accounts can be difficult to obtain.

It is a costly process. All fees for the insolvency service, courts and any trustee are taken out of the debtor’s assets.

If trying to obtain credit of more than £250 the debtor must disclose his status as an undischarged bankrupt.
The debtor must allow all his financial affairs to be scrutinised.

Names of those made bankrupt are published in the London Gazette and the local press and can be viewed online at the Insolvency Service website, making them accessible to anyone in the world.

Cannot hold certain public offices, such as MP, councillor or magistrate, or practice certain professions, such as solicitor and accountant.

A bankrupt may not hold office as a trustee of a charity or a pension fund.

A bankrupt is not allowed to be a company director or trade under any other name than the one used at the time of bankruptcy.

The trustee must be informed of any changes in circumstances during the bankruptcy.

Certain debts cannot be written off: fines, maintenance/child support payments, other family court orders, debts to secured creditors, debts from personal injury claims, debts incurred through fraud, debt arising from certain other orders of the criminal court.

Bankruptcy does not affect the rights of secured creditors. Where there are joint debts, creditors can still pursue the non-bankrupt debtor.

Bankrupts found to be blameworthy, culpable or dishonest can be made subject to a Bankruptcy Restrictions Order which can impose the same bankruptcy restrictions, plus some additional ones, for anywhere from 2 to 15 years.

You may freely reprint this article provided the author’s biography remains intact:

About The Author

John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the http://www.directonlineloans.co.uk website.

Copyright 2006 Leo J Quinn Jr Enterprises, LLC

Let’s talk about consumer debt. You know, the kind you rack up because you really need stuff.

Your sofa is looking pretty nasty. It’s covered with Kool-Aid stains,and throw pillows are hiding threadbare spots where the tufting peeks through. You even had to throw down some plywood to keep the pillows from sagging.

Time to go out and buy a new one, right?

Not if you don’t have the cash.

Here’s why that new sofa is going to cost you a lot more than the $800 sticker price if you go into consumer debt to buy it.

Let’s assume you buy the sofa as well as matching loveseat and end tables for a grand total of $2000. You finance your purchase through the furniture store for three years at an interest rate of 21.45% (let’s leave out the “no interest for two years” deal for a minute).

Your monthly payments will be…drum roll, please…$75.

“Wow”, you think. “That’s pretty affordable.” Sure it is.

Until you count the true cost of that sofa.

Let’s assume you’re 30 years old and you’re going to retire at 65. Let’s also assume you have access to a 401(k) that your employer matches at 50%, you can earn a 10% average return on investments, and your combined federal and state tax brackets are 20%.

If you pay for your furniture with cash and invest the $75 a month in your 401(k) for three years instead, you’d have $4,330 more in your account at the end of the three years (plus your sofa). Now keep that $4,330 in your 401(k) without any additional investment and in another 32 years, at retirement, it will have grown to $83,112.

So, basically, your sofa cost you $2,000, plus $700 interest, plus $83,112 that would have grown over 32 years in your retirement account.

Final sticker price: $85,812.

Yikes.

Here’s an alternative plan: hang on for another two years, save $80 a month in a money market mutual fund or savings vehicle that earns at least 4%, and use cash to pay for your new living room set.

Final sticker price: $1,920

Here’s an even better alternative plan: hang on for another two years, save $80 a month, and after you buy the sofa, put $80 a month in your 401(k) instead (you were already living without it for two years).

Final sticker price: $1,920, plus an extra $815,699 in YOUR bank account by age 65.

Now what about those “no interest for two years” deals? Well, you can certainly take advantage of those, if you’re disciplined enough to pay off the balance in less time. Most people aren’t.

You can use this strategy for every major purchase you make.

The cost of consumer debt is a big deal, when it’s compounded by time, interest and 50% employer matching.

So next time you hit the furniture store and the salesman is telling you, “It’s only going to cost you $75 a month”, you’ll know better. Tell him or her, “Nope! It’s actually going to cost me around $85 grand. See you in two years.”

Avoid consumer debt, and you’re well on your way to a much stronger financial future.

A financial educator for over ten years, Leo Quinn Jr. specializes in helping people get out of debt and stay that way. His “How to Own Your Paycheck Again” program has helped thousands of families improve their finances and escape the debt trap. Visit Leo’s website at:
www.OwnYourPaycheck.com

According to the Federal Reserve, Americans carry on average, $5,800 in credit card debt from month to month. Making the minimum monthly payment on that debt would take 30 years to pay off and include an additional $15,000 in interest. According to the Administrative Office of the Courts, 2,078,415 bankruptcies were filed in 2005—the largest number of bankruptcy petitions ever filed in any 12-month period in the history of the federal courts. With mounting credit card debt and the new tougher bankruptcy laws, people are looking for alternative ways of managing their debts.

Debt consolidation loans have become a popular way to free up money each month by consolidating several monthly credit card payments into a single lower interest loan. But, the question is whether it’s best to consolidate your debts into a home equity loan or an unsecured debt consolidation loan.

Debt Consolidation Home Equity Loans
A home equity loan is a one-time lump sum of money you receive in the form of a second mortgage that is secured by the equity in your home. Equity is the difference between how much the home is worth and how much you own on your mortgage. Home equity loans generally have lower closing costs than refinance mortgages. Mortgage refinancing closing costs typically include: title and escrow fees, lender fees, points, appraisal fees, credit fees, insurance and taxes, with the major expense being the title and escrow fees.

A home equity loan is usually a fixed interest loan with rates that runs slightly higher than that of a first mortgage, unless it’s a 125% Loan To Value (LTV) mortgage that allows homeowners to borrow beyond the value of their homes. Those rates usually run much higher that other mortgages and the origination fees can be as much as 10% of the loan balance. Home equity loans usually are repaid over less time than first mortgages, with repayment periods being as short as five years, but typically 15 to 20 years. Like a first mortgage, you have to pay off the balance of a home equity loan when you sell your home, so it’s best to find out if your loan carries prepayment penalties or balloon payments, in case you sell your house before the loan matures.

Benefits and Drawbacks of Home Equity Loans

The main benefit of a debt consolidation home equity loan is that most states allow you to deduct up to 100% of the interest you pay on your taxes. Home equity loans typically have lower interest rates than unsecured loans, and borrowers can get relatively large amounts of money.

While debt consolidation home equity loans have attractive benefits, there are also major drawbacks. One is that if you don’t make the payments, the loan can be foreclosed and you can lose your home even if you go into bankruptcy because secured loans are not dischargeable by Chapter 7 bankruptcy.

Another drawback is that exploitative lenders target homeowners, especially those with low incomes or poor credit. According to the Federal Trade Commission (FTC), there are many predatory scams, including:

· Equity Stripping: The loan is based on the equity in your home, not on your ability to repay it.

· Loan Flipping: The lender encourages you to repeatedly refinance the loan and often, to borrow more money, which incurs additional fees and points that increase your debt.

· Bait and Switch: The lender offers one set of loan terms when you apply, then pressures you into higher charges when you sign the loan papers.

· Deceptive Loan Servicing: The lender doesn’t provide you with accurate or complete account statements and payoff figures. That makes it nearly impossible for you to determine how much you’ve paid and how much you owe.

If you are not sure whether a home equity loan is right for your needs, you may want to consider an unsecured personal debt consolidation loan.

Personal Unsecured Debt Consolidation Loan

If your credit is relatively good, and you are employed, you may be able to obtain an unsecured personal loan that you can use to pay off some or all of your high interest credit card debts. With a personal unsecured debt consolidation loan, no collateral is secured. This means that the lender is relying only on your promise to repay the loan according to its terms and conditions. While the loan amounts are not as much as those of home equity loans, they can be up to $10,000. Loans of up to $1,000 may not even require a credit check.

Unsecured debt consolidation loans have lower interest rates than credit cards, but they generally are higher than home equity loans. Some loans allow you to take anywhere from one to five years to repay, which can ease financial stress.

Benefits and Drawbacks of Unsecured Loans

The main benefit is that if you are forced into bankruptcy, the unsecured debt may be discharged in the bankruptcy proceedings because there is no collateral securing the loan.

The main drawback is that you must have good to excellent credit to get an unsecured loan, and the loan amount is usually less than a home equity loan. The interest rates on unsecured debt consolidation loans are typically higher, and it is not unusual for debt consolidators to obtain commissions of 10% or more on your loan, which may inspire them to encourage you to obtain a loan which is not in your best financial interests.

In Conclusion

The answer to the question of whether you should get a debt consolidation home equity loan or unsecured personal loan all depends on your financial circumstances. If you have relatively good credit, are employed, and only have a few debts, you may want an unsecured personal loan. However, if your credit is not so good, or you have a lot of high-interest credit card debts or secured debts, a home equity loan may your best answer.

Resources: Federal Reserve, Federal Trade Commission(FTC),
The Administrative Office of the Courts, Bankrate.com - What home equity debt is Banking.About.com - The Basics of Home Equity Loans.

Maria Ny is an experienced free-lance writer who focuses on real estate & home financing related articles. You can read more debt consolidation related loan articles at http://www.mortgageloanoutlet.com and get more information about home equity loans and refinancing at http://www.mortgageloanoutlet.com/home_equity_loan.shtml

© 2006 Copyright MortgageLoanOutlet.com

A debt consolidation loan is a loan taken to consolidate a number of loans into one manageable loan. A debt consolidation loan can also help you in reducing the cost of your total debt as it usually carries a lower rate of interest than other loans, such as personal loans, credit cards, car loans, etc. A debt consolidation loan with an extended loan period can reduce the amount of your monthly loan repayments.

Thus, there are three main objectives of debt consolidation:

· To consolidate a number of loans into one manageable loan.
· To reduce the cost of debt.
· To reduce the amount of monthly loan repayments.

You may avail different types of loans to consolidate your debt:

Secured Loans
Debt consolidation through secured loans is a logical thing to do since secured loans carry low rates of interest and one of the objectives of debt consolidation is to reduce the cost of debt. However, you must be very careful while consolidating your debt through secured loans since it puts your property at the risk of repossession in case of repeated defaults in repayment on your part.

Unsecured Loans

You may also consolidate your debt through unsecured loans. However, before availing an unsecured loan to consolidate your debt, make sure that it does not carry a very high rate of interest otherwise the very objective of reducing the cost of debt will be defeated.

Home Equity Loan

Home equity loan is a type of secured loan. Home equity is the value left in a house after subtracting the unpaid mortgage balance from the current value of the house. A home equity loan is a second mortgage, which is taken against a house that is already mortgaged.

Low Interest Credit Cards

You can also reduce your debt burden by availing a new credit card that charges a lower rate of interest than your existing credit cards. If you use a low interest credit card to repay your earlier credit card dues, it will greatly reduce your debt burden. This can be even more beneficial when the new credit card offers 0% interest credit if it is repaid within a stipulated time.

The author is a business writer specialising in finance and credit products and has written authoritative articles on the finance industry. He has done his masters in Business Administration and is currently assisting Shakespeare Finance as a finance specialist.

You are laden with debt and experience grave difficulties in paying up. You work from dawn till dusk and hold two jobs, but your income is still inadequate to pay off your outstanding credit card balances. You feel like you are left with no choice but to declare bankrupt and get your debt wiped out. At least you can start on a clean slate and be more careful with your spending next time.

Before you file for Chapter 7 or Chapter 13, it pays to evaluate the consequences of declaring bankrupt. Although it may seem like the best option you have at the moment, it pays to consider the future consequences of going bankrupt.

For one thing, being bankrupt will leave mark on your credit history. If you had filed under Chapter 13, your bankruptcy record will usually remain for 7 years, while Chapter 7 will result in a bankruptcy record for between 7 and 10 years. This means that you will face much restriction on your finances at least for the next 7 years.

Although you may still be eligible for credit cards, your tarnished credit history will result in credit card companies charging you sky-high interest rates. You are of high credit risk to them, and they have every right to charge you a higher cost of offering you credit.

If you are thinking of getting a car loan, you will also be charged high interest rates. Does this mean that you will walk to work for the next 7 years? As cars are usually a necessity, you would probably have to bear the additional interest costs until your term is up. Of course, there have been circumstances where you can engage a car loan lender to negotiate for better terms with financing companies.

Another controversial consequence of a bad credit history has to do with your future employment possibilities. There have been cases where employees have been dismissed from well-paying jobs due to their credit history. This happened as these employees have been labeled a credit risk to the company they are working for. With their bankruptcy history, they are considered to be easier to bribe as compared to other employees.

With all these consequences laid out, it truly pays to think it through before taking the easy way out. Declaring bankrupt may not always be your only choice, as there are better ways for you to deal with your debt. These could include borrowing from friends and family to finance your debt, implement better budgeting strategies or refinancing your home to acquire funds at lower interest rates to pay off your debt.

Bankruptcy has long been a big question mark in the eyes of the consumer. After all they don’t teach us about bankruptcy in school. More often than not, a person’s view of bankruptcy is largely developed by either their parents or close relatives personal views or dealings with bankruptcy, or a persons view is based on what they see as far as ads etc. regarding bankruptcy. Too often these ads are simply put together by bankruptcy attorneys that want your business. Bankruptcy is big business. With 1,597,462 personal bankruptcy filings being made during the calendar year in 2004 you can see that there is a lot of money to be made by bankruptcy attorneys. While not all bankruptcy attorneys are in it for the money it is apparent by the plethora of advertisements online or on TV that make claims such as you’ll be on your way to good credit it no time, or claims that it’s easy to file that there are bankruptcy attorneys with their own personal gains at the top of their mind.

Here is a list of myths or untrue statements that I have come across when researching bankruptcy that I wanted to share with you, the consumer.

All Debts are Erased When you File for Chapter 7 Bankruptcy Protection.

This is simply untrue. Don’t believe anyone who says this to you. You will find out quickly that there are certain debts that can’t be erased. These debts include and child support or alimony, student loans, or any fraudulent debt. Although some legal settlements may be removed it’s not guaranteed.

Filing for Bankruptcy Protection Will Improve Your Credit Rating.

No it will not. This is used in several unscrupulous bankruptcy attorneys’ advertisements. Be wary of anyone telling you this. The fact is bankruptcy is by far the worst and most damaging mark you credit report can receive. Other negative factors may stay on your credit report for 7 years; bankruptcy can be there for up to 10 years.

Bankruptcy is an Easy and Pain Free Process.

Some bankruptcy attorneys use this in their advertising as well. This is a statement that is false as it is not an easy choice for most consumers. Bankruptcy is one of the harder choices a consumer will make and the aftermath that may develop after a bankruptcy can create long lasting personal problems. Relationship problems, trouble getting a job that requires a clean credit history, or even dealing with the personal stigma attached to bankruptcy can make it difficult for a long time. If someone tells you this is an easy choice they are not looking to help you but rather to profit from your hardships.

While bankruptcy may be unavoidable for some individuals due to hardships that they may be experiencing, bankruptcy is not for everyone. Bankruptcy attorneys should try to find other solutions for you before recommending their own help. Review your options before making your decision, as this may have a long term impact and not provide the quick fix some look for when choosing bankruptcy protection.

Article written by Richard Munster

Rick Munster is the Media Planner for Debt Reduction Service, http://www.debtreductionservices.com When he’s not busy media planning he can be found writing, hiking or finding a nice lake to drop a line into.

As any report on the subject will reveal, million of UK consumer are staggering through life under the weight of poor credit scores as a result of County Court Judgements being issued against them.

Of even greater concern is the fact that many don’t even realise they’re in a bad credit spiral until they have their application for a standard mortgage turned down.

In many cases, individuals with CCJs received their black mark because they moved house without notifying credit or store card companies, and subsequently missed a few payments. More and more mortgage lenders are coming to realise that this oversight often sits at the heart of the problem and that it often doesn’t mean that individuals with poor credit can’t afford to make mortgage payments.

Since CCJs remain on a permanent credit file for six years, a person can be forced to suffer the repercussions of making small mistakes years ago. Mortgage lenders are beginning to realize that this isn’t fair and are extending UK CCJ mortgages to individuals at reasonable rates. More lenient credit requirements by lenders, coupled with an environment of historically low interest rates, makes applying for a mortgage more affordable than ever before.

The moral of the story, then, is that however bleak the consequence at first appear, be sure to shop around for a mortgage even if you have poor credit. The best way to see if you qualify for a loan is to apply through an independent mortgage broker online via a web site such as this. Once your information has been taken, work can begin on finding a deal which suits your special circumstances.

However unusual you think your situation is, it’s worth bearing mind that you may be able to afford that new home after all.

Tony Shipley

http://www.re-mortgage247.co.uk

OK, so you are up to your head in debt. You are stressed out, it is now affecting the way you function and absorbing most of your daily thoughts. You have no idea what to do.

OK, first things first. Take a step back and try and look at things with a clear head. Your debt is manageable. If you have many bills and just can’t afford them all, the first thing you should consider is a debt consolidation loan.

A debt consolidation loan will help you out by consolidating all of your debt into one monthly payment that you can afford.

Second of all, figure out what is an affordable amount of money, that you can afford to pay monthly. You want this to be a fair amount of cash, however you still need to account for some money for yourself to prevent yourself from slipping further into debt.

The next step is to cut up your current credit cards. I know I’ve fallen into this trap on numerous occasions; I didn’t cut up my credit cards and planned to use them for ‘EMERGENCY ONLY’. Well, a few months roll by, and that new shirt, and that tank of gas add up to ANOTHER full credit card. If you no longer have credit cards, you can’t be tempted to use them.

Finally, you need to correct the problem by killing it at the root. Start saving 5-10% of your income and start saving to purchase those things you want or need. The immediate gratification of making a purchase will wind up haunting you in the long run. Rationalize every purchase and try to take into consideration if this purchase is a rational one or one based on emotion. If it is based on emotion, think about how purchasing this item will make you feel, then imagine the stress of being in debt. If you managed to make your way out of debt at least once in your life, I’m sure your urge to purchase this item will quickly fade.

Follow this simple outline, and your journey to become debt free will be under way.

About The Author

Ryan McKenzie

For more debt recovery information check out my web site at http://www.debt-recovery-online.com