Posts tagged: debt consolidation loans with bad credit

Debt Consolidation Loans for Bad Credit

“Consolidation” is term you hear all the time in the world of loans and financing, but you may not be aware of exactly what goes into debt consolidation loans for bad credit. Although I’ve never had the need to go through the process myself, I wanted to be able to put together a good article to let you know what you’ll be facing if your unsecured debts and credit cards become too much for you to handle.

In order to research this article I took the time to work through an application on one of the more popular debt consolidation sites, and here’s what I found:

First, they asked me a series of questions about my current financial situation and my debt. For example:

  • They wanted to know where I am with my monthly payments and other bills (can I keep everything current easily, are things getting tight, or are the creditors starting to ring my phone off the hook).
  • They wanted to know the main reason I’m looking for a debt consolidation loan with bad credit in the first place (unemployment or reduced employment, death or divorce of a spouse, unexpected increase in expenses…things like that).
  • Finally, they wanted to pull my credit report to see exactly where I am in terms of my debt and interest rates. I’m sure they take that information and plug it into a formula to determine whether I’m a good candidate for their program.

I’ll tell you that my general sense of this company, and of the debt consolidation industry in general, is that they really want to help people. They’re not the ones burying you in debt; they’re the ones trying to help you get out from under the debts you have. It’s nice to see that there’s a company in the financing industry that actually has people’s best interests in mind instead of trying to make them even worse off.

When you go through a debt consolidation program I would also strongly suggest that you take advantage of their credit counseling program. You got into a situation where you need a debt consolidation loan with bad credit due to lack of discipline, lack of education, bad circumstances, or probably a combination of all three. A good credit counseling and personal financial management course will protect you from ever having to go through something like this again.

Bad Credit Debt Consolidation Loan

One of the most overwhelming feelings in the world is to owe debt to multiple creditors and start to fall behind on the payments. At a certain point it’s nearly impossible for a person to keep their debts current. If you have several credit cards, a mortgage, a car payment, student loans, etc it can be really difficult to stay ahead of your bills – especially if you go through any periods of unemployment.  Just the credit cards will be nearly impossible to maintain if you miss a payment or two and your interest rates jump to 30%+. Soon your credit is damaged and you need to be looking seriously for a bad credit debt consolidation loan.

Debt consolidation loans for people with bad credit won’t necessarily improve your credit score, but they do put you on the path to recovery. After all, if you can’t wrangle your monthly payments you’ll never be able to repair your credit. Here’s how it works:

You begin working with a company that specializes in debt consolidation, and you basically turn all your debts over to them. They take the responsibility of going to your creditors and saying “Listen, this borrower is in way too deep, so you have a couple of options. You can either get nothing (because the borrower is going to file bankruptcy) or you can get a certain percentage of your money back from us. Then we’ll deal with the borrower.”

The lenders don’t want to lose everything, so they’ll usually agree to take a certain percentage of your balance and close the loan. After the debt consolidation company has settled with your creditors, they roll all the remaining balance into bad credit debt consolidation loans for you and their other clients. Instead of having multiple payments every month as well as interest rates all over the place, you end up with a single payment and a single interest rate. It’s a thousand times easier to manage. Although you’ll still have some stress related to your worsened credit score and the new loan you’ll be paying on for several years, at least it will all be in one place. Now the key is to never miss a payment.

There’s a lot of debate over debt consolidation loans with bad credit. Many people feel we’re not helping you out at all by bailing you out of your situation, but they need to acknowledge the reality that without these loans you’d walk away from 100% of your debt eventually, and if that happened on a large scale our credit system would break down in a hurry, so debt consolidation loans for people with bad credit are probably more important than we realize.