Help consolidating debt
Creditors are willing to do this for several reasons, including that it maximizes the likelihood of collecting from a debtor.These loans usually are offered by financial institutions, such as banks and credit unions, but there also are specialized debt-consolidation service companies.03 44 1132 798 302 from outside the UK 03 Lines are open Monday to Friday, 9am - 5.30pm.(For use by customers with hearing impairments only) We may record your call so we can check we've carried out your instructions correctly and to help us improve our service.Favorable payoff terms include a lower interest rate, lower monthly payment or both.There are several ways consumers can lump debts into a single payment.Debt settlement aims to reduce your obligations rather than just reducing the number of creditors.You usually work with a debt-relief organization or credit-counseling service.
However, there are specific instruments called debt consolidation loans, offered by creditors as part of a payment plan to borrowers who have difficulty in managing the number or size of their outstanding debts.
This works out to ,136.88 being paid in interest alone over time.
If the same individual were to consolidate those credit cards into a lower-interest loan at an 11% annual rate compounded monthly, he or she would need to pay 2.16 a month for 24 months to bring the balance to zero.
“Typically, the loan has to be paid off in three to five years,” says Harrine Freeman, CEO, and owner of H. Freeman Enterprises, a credit repair and credit-counseling service in Bethesda, Maryland, and author of “How to Get Out of Debt.” These types of loans don’t erase the original debt; they simply transfer all your loans to a different lender or type of loan.
If you need actual debt relief or don't qualify for loans, it may be best to look into a debt settlement rather than, or in conjunction with, a debt consolidation loan.
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Although each lender will probably require different documentation depending on your credit history, the most commonly required pieces of information include a letter of employment, two months' worth of statements for each credit card or loan you wish to pay off, and letters from creditors or repayment agencies.