Debt Consolidation Before Bankruptcy! (Ezine Ready) | Finance

Entirely too many people who are in financial trouble are considering bankruptcy without considering debt consolidation first. The entire purpose of debt consolidation services is to keep the long-term marks off of your credit record. And although you may not know it, undergoing proper debt consolidation can actually keep any financial mishaps from hitting your long term record.

Going through debt consolidation can actually increase your credit score in some cases. Because the main purpose of debt consolidation is to give you a longer period of time to pay your loan, as long as you can keep up with those payments, you can increase your credit score. But we are getting ahead of ourselves.

Many people do not know what debt consolidation services are, or even what debt consolidation means.

When you consolidate your debt, you take your many debts, crush them into one debt, and try to find a new creditor that will take one check from you which will cover all of your debts.

This has a psychological effect of giving you only one manageable debt to handle rather than an unmanageable few. It also has the financial effect of giving you a longer period of time to pay back your debt, as well as giving you a lower interest rate in many instances. Many times, the new creditor will buy your debt at a discount, which will effectively give you a forgiveness of some of your debt. All of this depends on the negotiating strength of your professional debt relief company, and your current financial record.

You are great candidates for debt consolidation if you are near bankruptcy. None of your creditors will want you to go into bankruptcy, as this means they will either get nothing, or have an extremely difficult time getting something from you. At this point, they will be very willing to negotiate on pennies on the dollar, and this is exactly what debt consolidation is set up to do. However, because debt consolidation is not set up within the legal system, you can actually negotiate a much better and more favorable outcome for yourself, as long as your creditors are willing to play ball.

Give yourself the chance to go through the debt consolidation process before you consider out and out bankruptcy. As long as you can get the right debt relief company to help you, many of your creditors are much more willing to work with you than you might think.

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