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Bad Credit Consolidation Explained

Jul 16, 2008
As a direct result of being unable to manage credit, many Americans have resorted to bad credit consolidation. Bad credit consolidation is fast becoming a fact of life in the United States, and it seems everybody owes, be it school loans or mortgage payments.

Most bad credit and the resulting card debt consolidation is due to the mismanagement of credit cards. Failure to make payments or making late payments can result in huge penalties and fees, resulting in a landslide of unmanageable debt. For many, the only way out is consolidation of debt.

Credit problems can start off small but when large sums are involved, can quickly snowball into a seemingly insurmountable debt mountain. First its missing a payment or two and getting charged a late fee. Then the minimum monthly payment rises because of extra charges plus interest on your unpaid balanced. Another missed payment and it becomes difficult just to pay the minimum and create some breathing room.

When credit problems begin, the down slide is quick. Before you know it, you are in a deeper mess than you ever thought you would be. Most people initially react by making matters worse, reaching out for whatever help they can get quickly, and usually the most convenient help is the preferred choice.

Using an additional credit card as a form of card debt consolidation is the equivalent of robbing the left hand to pay the right . It may be convenient and work for the short term, but inevitably the individual will become more mired in debt. For these people, bad credit consolidation can be a way to eliminate debt.

After this cycle goes on for a while, a credit rating becomes awful, making it nearly impossible to get a loan for a car or house approved. Collection agencies may begin making harassing calls, intent on getting you to pay your debts regardless if you have the money or not!

Its usually at this point that people look for an all-in-one solution that will solve their debt problems. Credit card debt consolidation is a popular choice. It involves rolling all debt into one and dealing with one creditor on an agreed basis.

There are many benefits to bad credit consolidation, and debt consolidation shouldn't necessarily be a last resort for debtors. Consolidation of debt reduces monthly payments to one, thereby making payments more manageable. The consolidation company distributes payments amongst the debtors. In addition, interest rates are low and fixed. The debtor also has the added reassurance of knowing he or she is receiving assistance with managing their debt, thereby gaining a little peace of mind. Card debt consolidation is not a cure all, and the debt must still be paid. However, it can be an invaluable tool in restoring good credit and gain a little breathing room.
About the Author
Finding a way to break out of the debt management cycle is important for your sanity and financial prospects. You can find debt consolidation help here: debtguide101.com
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