Debt Consolidation offers a one stop solution to Alabama consumers burdened with unmanageable debts, poor credit scores, and repeated creditor harassment. With consolidation, you can replace all your existing debts with a single payment and simplify your obligations.
Debt consolidation works the same way in Alabama as in any other state. It allows you to combine your multiple debts into a single payment, which you pay off at a lower interest rate and over a longer period of time.
You can consolidate your debts either with a consolidation loan or you can enroll with an Alabama debt consolidation company, accredited by the Better Business Bureau.
Client satisfaction level:
When you enroll with a debt consolidation company, the company will work on your debt issues in the following order:
If you want to consolidate your debts with a consolidation loan, then you will have to take out a low interest loan and use the funds to pay off your current debts.
Once you pay off your existing obligations, you will be left with only one debt towards the consolidation loan that you have borrowed. Low interest on the loan will lower your monthly payment towards the loan and also help you save money every month.Types of Consolidation Loans
Consolidation loans can be secured or unsecured. Secured loans are borrowed against some collateral, while unsecured loans do not require any collateral.
If you have some asset such as house, car, landed property, or even jewelry, then you can use them as collateral for your secured loan. Normally, the use of collateral lowers the interest on the loan and increases the loan amount that you can borrow. So, secured loans are preferable as consolidation loans.
If you have considerable equity on your house, then you can consider a Home Equity Line of Credit. The more equity you have on your house, the lower the interest on the loan. Mortgage refinance is another good option that you can consider for consolidating your debts.
If do not have any assets, you can look for a low interest unsecured loan and get your existing debts consolidated.
If you are struggling hard to pay off the following obligations, then debt consolidation will be useful for you:
When you set out to consolidate your credit card debts, do not forget to check out the credit card debt laws prevailing in Alabama. It will prevent from you falling prey to credit card debt consolidation scams and will also help you enjoy the benefits of debt consolidation.
Debt consolidation causes minimal damage to your credit score because it helps you pay off your entire borrowed amount.
When you take out a consolidation loan to consolidate your debts, your score initially drops. But as you start paying off your existing debts, your score automatically rises. Later, when you pay off the consolidation loan, your credit score increases more.
While you are in a debt consolidation program, it is very important for you to keep the following in mind, in order to prevent your credit score from getting damaged:
Thus, debt consolidation program can be a great way to fix your bad credit score, if it is handled carefully.
Last Updated on: Thu, 7 Apr 2016