Debt Consolidation in Maine

How does Debt Consolidation Program work in Maine?

There are two types of debt consolidation loans available in Maine:

• Secured loans- these are secured against collateral like a house or car. If the debtor defaults on the loan, the creditor can retrieve the amount of the loan by selling the collateral.
• Unsecured loans- these are not secured against any collateral. In order to get this type of loan you need to show a favorable credit score and a sufficient income.

Back To Index

Role of Consolidation Companies in Maine

Debt consolidation companies help you merge all your multiple loans into a lump sum spread over a longer repayment period. The benefit of debt consolidation is that your interest rates are reduced without your credit score getting hurt.
After enrolling with a consolidation company, a consolidation lawyer is appointed. The lawyer consolidates your multiple payments and formulates a plan to pay your creditors. The lawyer also communicates with your creditors to reduce your monthly payments, making them affordable.

Back To Index

Benefits of Consolidating with a company:

Back To Index

Loans eligible for Debt Consolidation in Maine

• Student loans.
• Medical Bills
• Payday loans
• RV loans
• High interest car loans
• Personal loans
• Credit cards.

Back To Index

The effect of debt consolidation on your Credit Score

When you take out a new debt, it creates a negative impact on your credit score. But as you start paying your debts, your score improves. If you continue making payments consistently, your credit score improves even more.

Back To Index

Things you should avoid while in a Consolidation Program

In a debt consolidation program you need to be careful about many things in order to avoid any problems. A simple mistake may create havoc in your credit score. Therefore you should keep a few things in mind that can save you from making mistakes:

• Avoid closing your accounts as soon as you have paid off your debt. If you close your accounts your credit history does not change, and will decrease your credit to debt ratio. If it becomes necessary to close your accounts, then you should close the newest ones rather than an older account.
• Debt negotiation can adversely affect your credit rating. In a debt settlement program you negotiate a settlement plan with your creditors for a lower amount. As such you pay far less than what you actually owe. This affects your credit score more than consolidating your debts.
• Incurring any new loans while on a debt consolidation program can affect your credit score negatively.
• Defaulting or making late payments decreases your credit score. Make sure that you make timely payments on your consolidation loan in order to avoid any new debts.
• Balance transfers can be dangerous.Typically interest charges on credit cards are higher than the interest charged on a consolidation loan. Therefore, you could end up deeper in debt that you were before.
• Avoid applying for more credit,while in a consolidation plan. Whenever you apply for new credit it opens up more chances to default on your debts.

Debt consolidation is the safest and the best way to improve your credit score. If you can handle your financial issues prudently, your dream for a debt free life will come true.

Back To Index

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Please consult a qualified attorney for advice on your specific situation.