Debt can make your life very difficult. The debt which you might have taken years ago, without thinking about the rate of interest or any other fees, can become a huge financial burden.
Debt can also lead you to bankruptcy. This means that your credit score will suffer for another 7 to 10 years. This report will show on your credit status. It will not allow you get benefits from credit companies.
People even die from the pressure of debt. They leave behind their loved ones to cover the loan amount with the creditor.
Normally, the assets are taken by the creditors in case of a deceased account. The remaining then is given to the beneficiary. But in the case the assets are not enough, the creditor will have to take the burden of selling the assets and recover the debt amount. This is unless there was a guarantor involved, in which case the guarantor should be responsible.
In cases of home loan and mortgages. The debt is not cleared and the person dies, the family of the person has to take over it. The mortgage if they wish to stay, or they will have to sell the house to someone else. This can be done in order to settle the creditor’s loan.
Thus, poor financial planning can put your family in a stressful situation.
Before you give up and never are able to recover from this damage, let’s see what you can do in order to get back on track. Debt consolidation is a life-saving step you can take in order to settle all your other loans and get a fresh new loan on a lower interest rate in order to clear the unwanted interest you are paying. The banks will offer you a low-interest rate loan to settle all your debt and you just have to pay one single EMI for your entire loan.
Loan for Debt consolidation can be of two types, secured or unsecured. Technically this loan is just like a personal loan, only the banks offers a lower rate of interest because the bank knows that you are going to consolidate all your loans. On a secured loan, you will get an even lower rate of interest and unsecured will have a bit higher rate of interest.
The debt consolidation calculators will help you with the approx. amount you need to lend and how much will you end up paying back. And the procedures for applying for this loan are the same as to get any loan. You just need to request the bank for a debt consolidation. Here are some documents you might require to get a debt consolidation loan.
The documents required in this scenario is the same as any personal loan you would apply. Only in the case of secured loan, they will ask you paperwork for the collateral.
●The document such as Proof of Identification
●Proof of residents
●Proof of income and Bank statement.
●The letter of consent from the debt loan company to allow you to close the loan account prematurely, with or without any penalty charges.
Settling your debts is no easy task. But with the right financial planning and proper steps, it can be done. And the process is sure to relieve the stress for both you and your family.