How Do I Consolidate My Debts? As the current trend indicates, the best way to consolidate debts is to apply for a debt consolidation loan. It is a simple and effective way to get rid of home loan, credit card loans, education loans or consumer loans. One will have to transfer the other high interest debts to equity home loans where the interest rate is below 10%, lesser as compared to other rates. There is a process towards debt consolidation, which require step-by-step attention of the borrowers. There are some requirements to be fulfilled by the borrower to apply for loan consolidation. Bank asks for a copy of monthly budget so that they can determine if loan payments is affordable. A co-signor or collateral is needed in order to secure the loan. Collateral includes assets that can be produced and kept against the security of the loan. A simple concept goes with it is that if the borrower fails to pay the debt on time with all the relaxations then the collateral can be possessed by the creditor. House is the most common collateral used. Cars and furniture are the other assets used as collateral. The borrowers also need to verify certain aspects before applying for debt consolidation: Payment of commissions: Low fees for the loan are easily available so one can stay away from high fees. A fixed interest rate is preferable to avoid any change in payments. Proper check on company’s policy regarding debt reduction as it may harm credit ratings. Following certain guidelines and steps can help while applying for debt consolidation: A check on the total amount of debt and then the decision to borrow with consolidation loan is a primary step. Getting a settlement figure is preferred to avoid redemption fees in case if someone wants to pay off the debt earlier. With income and expenditure as concern, making a budget gives a systematic approach towards consolidation and keeping certain amount aside for emergencies is always advised. Calculation of affordability: The house and assets may be taken away if the payment is not made on time. Risking collaterals is very common amongst the people for consolidation purpose but one has to ensure that it can be recovered on time. If worked out with precision and discipline, going through the process of application and finally consolidating debts is not a difficult task.   Back     411 Web Interactive. Customer Care - Privacy Policy Issues 14100 W. Olympic Blvd 15th Floor West Los Angeles, CA 90064 800.706.6225 x6910 Effective Date: March 20, 2005

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