Unsecured Debt Consolidation Loan

Across the United States of America, as citizens’ mounting credit card balances coincide with the greater economic troubles, many borrowers have considered taking out an unsecured debt consolidation loan as the primary source of relief for their financial burdens. The attractions of loans which could consolidate unsecured debt are easy enough to understand. Certainly, the consolidation loan officers, trained to work upon the guilt and fear and mounting shame of borrowers who need professional assistance dealing with unsecured debts beyond their personal control, shall exploit the growing desperation of ordinary Americans for some resolution of their credit card accounts and hospital bills and other unsecured debt loads which threaten to upset family budgets during a period of remarkable financial upheaval. Nevertheless, much as consolidation loans could be of some benefit to the right sort of consumer, many households will find that consolidating their unsecured debts as opposed to a more direct approach will only leader to greater budgetary uncertainties.

While not every debt consolidation loan officer should be seen as predatory, the recent economic news reporting the disintegration of the consolidation industry should leave consumers fighting against unsecured debts on guard for financial scavengers. Many debt consolidation consultants have been properly trained to evaluate borrowers’ specific unsecured debt structures and supply them with the proper information which would allow them to manage their unsecured debt loans more efficiently in the future. Once again, the advantages of witnessing all of a borrower’s unsecured debts be consolidated into a single loan – and, to lower the strain on domestic budgets and ease the stress of already put upon borrowers, a single monthly payment – should not be dismissed. For that matter, the unsecured debt consolidation loan should almost always feature interest rates well below those that are charged to credit account balances.

However, there are also drawbacks to debt consolidation loans which each family must consider before simply allowing the consolidation loan officer to lead them to surrender the equity of an existing investment or take out even more unsecured debt. Since most applicants serious about the debt consolidation loan programs no longer have the financial capacity nor outstanding FICO scores and credit ratings to qualify for unsecured debt consolidation which would take care of much more than a few thousand dollars, most of the consolidation loans would be predicated upon utilizing the collateral that the borrowers already partially own, and, for the grand majority of consolidation loan programs, that means the unsecured debts would end up tied to the primary family residence. Not only does this put the household shelter in serious jeopardy – fooling around with ever diminishing equity midst a shrinking real estate market that has seen property values fall by the month – but, for the sake of temporarily hiding their unsecured debts, the home owners will also allow the (admittedly lessened) interest rates to continue to compound upon the consolidation loans for twenty or even thirty years.

This sort of procrastination of unsecured debt payments through consolidation loans could end up costing the family that endeavors to take advantage of consolidation loans more than double the existing amounts of the unsecured debts. Furthermore, since the borrowers would have no need to cancel their current unsecured debt accounts – credit card companies love the consolidation loan option – they will be more than likely to spend their way toward similar problems in a quick enough amount of time. Most consumer finance professionals unbidden by commissions would agree that some program like settlement negotiation, which requests that creditors absolve their clients of a certain percentage of the unsecured debt balances in exchange for foregoing bankruptcy protection and agreeing to regular monthly payments, not only preserves the equity of the family’s property investments (rather than risking foreclosure through consolidation loans) but also forge an enduring resolution to the burden of unsecured debts.

The decision to reach out for help with your debt is not one that's easy to make. You were raised to "do the right thing", but now it’s nearly unbearable. You struggle along while your creditors are turning up the heat. And now you’re at the point where the late fees, penalties and interest expense make it impossible to keep your head above water.

Ask yourself this. If you could eliminate your debt without permanently damaging your credit, why wouldn't you?

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