Knocking on the doors of a bill consolidation company can be a great way to choose to make sure that your financial future is better than what it's been in the past. To consolidate debt is, to find a lender who will club all of a borrower's loans into one lump sum that only has to be paid to that one lender. To your average beleaguered borrower who owes sums of money all over the place, finding a lender who will not only roll all his debts into one lump sum but will also arrange for him to make a lower monthly payment can be a godsend. There is a lot more that a bill consolidation company can do for a debtor in distress than to merely help bring all of his loans together. The financing to make that happen is only one part of the services a bill consolidation company provides. They can often bring creditors to the negotiating table to work out better interest rates and better loan terms.
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More valuable than that though are the skills that the bill consolidation company brings to the table helping a borrower work out an agreement with his creditors where they agree to settle what they are owed at a lower sum. Each month, the borrower pays the consolidation company one lump sum; and they in turn divvy up what they are paid to the creditors. What bill consolidation does is not really refinancing; bill consolidation has the effect of restructuring a person's debt. Restructuring done this way can often be a much more desirable way to go than declaring bankruptcy - which can be an especially expensive route to take.
The first thing that happens when anyone declares bankruptcy is that their credit score is effectively destroyed for years. No one with a bankruptcy on their credit report is ever offered any kind of loan, life insurance and in some cases even a job. Some people actually lose their jobs when they declare bankruptcy. Choosing a bill consolidation company to administer your loans instead, is always a better route to take.
Bill consolidation companies usually deal in helping you out with unsecured debt - examples of which might be student loans, tax debt, credit card debt or lines of credit you might have with your bank. There is no collateral that any of these lenders hold that they might sell when you default. These are just loans that are given to you for your good credit. You can't generally consolidate your secured loans - the ones that do have collateral attached to them, such as the loans for a car or a home.
Before you sign up with a bill consolidation company, make sure that all your creditors are willing to work with that company. That's also a good sign that the consolidation companies chosen is a reputable one.
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