Advantages of Debt Consolidation and Reduction

With debt consolidation you roll up all your debt under one lender. You take the loan from this new lender and use the sum to pay off different lenders. This helps you to lower the monthly installments that you pay to different lenders.

Debt consolidation in fact makes your debt situation much more manageable. You improve your credit score as you don't have to file bankruptcy. You pay all your lenders and clear your dues with debt consolidation and reduction.

The debt consolidation and reduction reduce the worries and stress associated with the debt. You don't have to run to different lenders and make the payments. The repayment agencies are there for you. You deposit the payments and these agencies pay to your lenders. Single monthly payments make the debt management much easier.

You don't have to remember all the deadlines of the loan installments that you have to pay to different lenders. With debt consolidation, you pay regular installments to just one lender. This thus lowers the lenders significantly and thus provide for a better administration and management of the debt.

The plan is structured and customized according to the needs of the individuals. Thus, if you apply for the debt consolidation loan, the agency where you approach for the loan will ask you about the loan that you owe to different lenders, the interest that you pay to different lenders, and the installments that you pay.

They take the information about the mode of payment and the term of the loan. They also ask you all the details of all your expenses and your annual income. With all this information they devise a debt management plan that is practical enough to be followed.

Debt reduction is a part of debt consolidation which either reduces your debt completely or reduces them significantly through different debt consolidation options. The debt settlement helps you to lower the debt by 50% to 80%. In this you approach your lender on your own or through a debt settlement agency and negotiate with your lender.

You explain your lender that you are not in a condition to pay your debts any further and need to settle the pending amount. This way you pay much less than you would actually have paid.

You can also apply for home equity loans to roll up all your debts under one lender. This loan lowers the total interest rate. The interest that you pay is tax deductible. Also the loan comes with the repayment term of 15 years. You can spread the loan installments over the years and lower your monthly installment amount.