Debt Consolidation

Debt, or owing someone something, has been around since the first starving man offered a well-fed man his next spear if he would just share his dinner with him. Or, let’s say, since the first well-fed man trusted the starving man to repay him at a later date. The written contract didn’t come along for many centuries so that those first scruffy looking cave-businessmen were the first to develop the gentlemen’s agreement. It makes you wonder what happened back then if someone did not honor his bargain? And when did the first well-fed man decide he could charge anything he wanted for that dinner? And how long was it before a man started paying on time for that cool looking leopard skin to replace his plain brown bear skin instead of concentrating on the necessities of life? And when did going into debt become so easy?

As life has become more complicated, our systems of debt, along with the multitude of different forms of debt, has continued to increase and continued to become easier. Unfortunately, this easy debt eventually just makes our lives more complicated. And although there are many, many ways we can get ourselves into trouble during one life time, there are only a certain number of ways to owe money. Of course, this is not counting the old pledging your first born. The most common forms of debt today are the home mortgage, the second mortgage, the car loan, the personal loan, the collateral loan, credit cards, and our short-term monthly household bills.

Many people feel that owing money is very close to being a sin, but in this day and age it is a necessity if used correctly. What is not always a necessity is what we buy with those loans. We are not going to debate whether people should have loans or not because they are a fact of life. Besides, it’s a waste of time to worry about something that is impossible to change. It is much better to use our precious time figuring out how to use debt correctly in the future.

Life can be very hard. Therefore, we feel that it is very important to enjoy as much of life as we can in order to handle the times that are impossible to enjoy. But if you are so deeply in debt that you cannot even pay all of your bills every month, are you ever enjoying life? Or are you spending all of your time, including time tossing and turning in bed, worrying about what you are going to do with all those bills?

Some people get in debt very quickly such as the newly graduated student with his or her first job who must immediately get his first new car and charge all of their other needs on their first credit card. Other people build up debt so slowly that it takes twenty years to suddenly realize that it will take the rest of their lives to pay off these bills. And other people end up in debt because they lost a job or had some other emergency and yet continue to spend borrowed money.

A personal loan is one that is unsecured such as a loan to rebuild your car engine. That is, a personal loan is not secured by something that the bank can take if you do not pay that loan back on time. These unsecured loans are relatively rare today unless you deal with a small local bank (which are also rare today). Today most banks would tell you to use a charge card for these types of loans rather than sign an unsecured loan. However, as personal loans do still exist, you should understand what you are getting into with them.

As with any loan, you are signing a contract. And what is written on that paper in black and white is very seldom negotiable. Therefore, if you borrow money for some reason, be aware that the bank will come after you for repayment even if there is no collateral involved.. If you need money to start your own business and then cannot make those payments, the bank will take you to court and will win their case easily. In other words, stay away from personal loans if at all possible.

Consolidation loans are usually personal loans also. Again, we see ads every day asking us to consolidate all of our outstanding debt into one loan. They tell you that this will usually mean a smaller monthly payment for you. However, which is better? Should you continue to pay off your loans or now have one loan that may be a smaller monthly payment but will just take you longer to pay off? Remember that the consolidation loan will pay off your debts plus all of the interest you would be paying on them. However, you will now be paying a bigger loan with additional interest on it and usually the interest is much higher. Also, if you get into even more financial trouble in the future, instead of having several smaller payments each month that you can work with the lending agency in order to make smaller payments or even float one payment for a couple of months, you will now have one big payment that you must meet every single month no matter what. We are talking even more pressure here.

Please stay away from these consolidation loans. They will not help you financially in the long run and can definitely end up hurting you.

Collateral Loans

A collateral loan is secured by something. In other words, you get the money you want but the bank can take from you whatever item or items you used as collateral if you default on the loan. Let’s say you took out a few thousand dollars to start a small business and used your stock holdings as collateral. If you do not pay back that loan, the bank can sell the stock to cover the loan. If the sale of the stock does not cover the entire loan, the bank will sue you for the remainder of the loan plus court costs and interest. There is no room for negotiation on these types of loan as you have nothing to negotiate with.

Therefore, a house mortgage or a car loan are types of collateral loans. No financial institution wants to repossess your car or foreclose on your house. It is a lot of bother and they will generally end up losing money in the process. That is, because your house has devalued instead of gaining equity, the bank will not be able to resell it for its original value. And even a one-month old car immediately depreciates as soon as it is driven off the lot so they will be lucky to get back their loan money on it if they have to repossess.

And do you want them to repossess or foreclose? Of course not. For one thing, you have already paid a good deal of money out of your pocket that you will not ever see again. For another thing, it will go on your credit report and it will be a long time before you are able to buy another house or car. And even if you do get a future loan, it will be at a higher interest rate because of the negative credit rating. We certainly want to avoid the result of not making our payments if at all possible.

Non profit debt consolidation organizations with accreditation help consumers to clear debts within a short span of time and usually for no profits on their own.

Safe options for non profit debt consolidation organizations:

One of the safest ways to settle debts and multiple loans is debt consolidation. There are different kinds of organizations which offer different services. Amongst these are the non profit debt consolidation organizations with accreditation. These companies give the other regular companies and edge when it comes to providing benefits to consumers. These options are relatively safe as they have certifications and also more useful for the debtors.

The truth about regular debt consolidation organizations

Amongst the various organizations in the market are the non profit debt consolidation organizations with accreditation. Most of the regular debt consolidation organizations provide services for their own benefits. There is a certain amount of fees which is charged in the monthly repayment. Hence even though there are claims of many of them providing free services, they are charging for their basic services. The result is increased problems for the clients and increase in the debt amount with the fees of the company included. Hence profit making organizations often think about themselves instead of the clients.

Benefits of the non profit debt consolidation organizations

The non profit debt consolidation organization do not work for their own profits. Instead their attention is focused on the user. The main motive of these companies is to guide the person who has approached them for assistance. They try to work out the best solutions for debt consolidation so that all kinds of debts, including the multiple loans and credit card debts, of the debtor can be settled at the earliest possible time.

Services provided by the non profit debt consolidation organizations

The non profit debt consolidation organization provide various kinds of free services which offer guidance on reducing debts and making life debt free. The main advantage here is the debt counseling services which are provided. Here assistance is provided on the importance of debts and management of finance. The purpose of this assistance is to help avoiding debts and mismanagement of the same in the future. They also provide assistance on rebuilding the credit card score and other similar options. Selecting a good debt consolidation company that does not work for profit should be a job which is well researched. This will help avoiding companies which offer some free services but have hidden charges for most of their services.