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Debt Consolidation Helps Financially ChallengedDebt consolidation is a form of debt relief that helps financially challenged individuals regain their consumer spending power. This is one method of eliminating debts that actually works for consumers. Debt consolidation choices include using a home equity loan, seeking credit- counseling services, filing for bankruptcy or using a debt-relief service. A few popular reasons to pursue debt consolidation are to lower interest rates and to reduce monthly payments. Often, high interest rates attached to an individual's debt make it difficult to trim away the principal debt amount. Debt consolidation eliminates high interest rates by combining the multiple balances with a lower interest rate. This tool lowers minimum payments and reduces the total debt amount. An intriguing method of debt consolidation is using a home equity loan or line of credit. Consolidating debt through one of these method yields some tax advantages along with a lower interest rate. The main risk is losing the home if an individual is unable to repay the debt. Some debtors faced with serious debt hardships might find these methods of consolidation difficult to achieve, and they may find a better avenue through credit counseling, debt resolution firms or bankruptcy. These debt consolidation methods, however, can damage an individual's credit score. Chapter 7 bankruptcy is a quick relief to a serious financial burden because it eliminates debt, but it is the most damaging to person's credit rating because it remains on the credit history for 10 years. Chapter 13 bankruptcy requires a specific payment towards debt and it remains in a credit report for seven years. Consumer credit counseling services help people construct a proper debt management plan. The agencies can get interest rates reduced because they possess relationships with creditors individuals don't possess. Consolidation through debt settlement is a fast and effective method that will not drastically damage one's credit. Debt settlement firms work to save you thousands on your debt. Debt consolidation can occur through various methods, and it is important for people to remember that getting out of debt should be the first order of business. Author bio: Brian Williams, a graduate of the University of Texas at Arlington, has 11 years’ experience writing and editing at daily newspapers in Texas. Having worked his way through college and experiencing the transition to professional life, Brian understands how credit affects people’s lives. For more articles by Brian on student loan debt and bankruptcy, go to http://www.creditsolutions.com. Credit Solutions is your alternative to debt consolidation.
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