Debt Consolidation Loans

What is a debt consolidation loan?
How can a debt consolidation loan eliminate your credit card debt?

A Debt Consolidation loan is a personal loan that allows you to consolidate many other debts into one.

For example, if you have three credit cards, you may be able to eliminate your credit card debt (see details below) by getting a Debt Consolidation loan to pay off the credit cards, so that you only have one payment each month instead of three.

The following sections discuss advantages and disadvantages of obtaining a debt consolidation loan, and explain the criteria you need to meet in order to qualify for a debt consolidation loan.

Advantages of debt consolidation and refinance loans

The advantages of a Debt Consolidation loan are:

• Your Debt Consolidation loan may have a lower interest rate than the rate you are paying on credit cards, so the loan should reduce your interest payments and help you eliminate your credit card debt, eventually.
• With the lower interest rates and/or extended terms a debt consolidation and refinance loan may offer, you may be able to reduce your total monthly payments.

• You replace many payments each month with only one payment, which should make your monthly household budgeting easier.
• Your Debt Consolidation loan may have a lower interest rate than the rate you are paying on credit cards, so the loan should reduce your interest payments and help you eliminate your credit card debt, eventually.
• With the lower interest rates and/or extended terms a debt consolidation and refinance loan may offer, you may be able to reduce your total monthly payments.
• You replace many payments each month with only one payment, which should make your monthly household budgeting easier.

Do I qualify for a Debt Consolidation loan?

To qualify for a Debt Consolidation loan you must meet the following:

• The bank will require a copy of your monthly budget to determine if you can meet your loan payments.
• You must be working, or have some other source of income allowing you to repay the loan. Banks calculate your ability to service a debt based on your income, so bring with you your most recent pay stubs, and last year's tax return, to the bank or lender when you apply for a debt consolidation loan.
• To satisfy prerequisites set up by the lending institution for debt consolidation and refinance loans, you may need a co-signor or collateral (such as a car or a house).

What is the next step?

First, do some research. For example, there are web sites that offer debt consolidation loans information. It is in your best interest to gather as much information on debt consolidation loans as possible to determine whether or not you qualify for a loan.

We also suggest that you read the following articles about debt consolidation loans:

• How to get a debt consolidation loan and refinance with a second mortgage
• How to reduce your monthly payments with a debt consolidation mortgage loan
• Research your options in regards to a debt consolidation loan

To determine if you qualify for a Debt Consolidation loan, contact your banker or finance company, or some other lending institution. The major Canadian banks, debt consolidation lenders, can be reached through their web sites, or via the yellow pages. In case you own a house, you could contact a mortgage broker. In addition, there are a number of lenders that specialize in dealing with people in financial trouble and, especially, with bad credit - car loan lenders being an example. In case debt consolidation and refinance loans are beyond your reach, don't despair - there are other debt management solutions available to you. For professional help, please contact one of our licensed bankruptcy trustees today and arrange for a free initial consultation.