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Debt Consolidation: Understanding This Process

Debt is a silent endemic in America, one that has gripped millions in its cruel hands and refused to let go. Stress, anxiety, and difficulties paying back debt can not only impact a person’s mental health but make life very difficult for them in general. Thankfully, consolidation can help provide some help pushing the eternally heavy stone of debt off of the chests of America. 

What is Consolidation?

Debt consolidation is a powerful way of getting your finances back in order by working with a specialized lender. These financial companies agree to buy the debt from your debtors at a lower rate simply to get a big one-time payment. Then, you agree to pay back the money you owe to the new owner at a fairer and more reasonable rate, depending on your needs. 

When done, your debt focuses in a single lender, meaning you’re not chasing down different companies, mailing out checks to dozens of firms, and suffering under various interest rates. Everything is set up in one repayment package. Just imagine the relief knowing that you don’t have to haggle with 10-12 different teams. Instead, you’re working with just one borrower.

How to Get a Consolidation Loan 

The first step in getting a consolidation loan is to contact a company that can help you. These firms have different interest rates, down payments, and approaches, so do your research carefully. Some might take on anybody, while others only take on specific groups of people. It’s worth sitting down and talking with them to learn more about their process. 

Don’t worry if this process sounds complicated. Your new lender will work through it with you and provide emotional support to make it much easier. Most debt consolidation loans follow these steps:

  1. Discuss all your debt with the firm so that they know what you owe 
  2. Come up with a plan that makes your repayment more accessible and more effective
  3. Agree to pay a large fee to remove much of your debt (optional for some firms)
  4. Set up an automatic payment option from your bank account (optional but helpful)
  5. Pay off your loan over time (usually a fairly quick process, such as 3-5 years)
  6. Go through financial counseling to learn how to avoid falling into the debt cycle again

Finding a Company 

Firms like Symple Lending provide help with this process, giving borrowers a chance to put all of their debt into one easier-to-pay package. Often, consolidation even lowers what they owe by asking for a one-time large payment. If they can afford it, this option works well for people who want help. Companies like Freedom Debt Relief make this process even easier to handle.

Ultimately, the choice of your consolidation team will vary depending on your needs. As always, it’s critical to talk with your family, friends, employers, and other trusted individuals to get extra insight into this process. Remember that these critical financial decisions impact more than just you, so make sure that everybody in your life fully understands what you’re doing.

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