What is debt consolidation?
A debt consolidation is a single loan (generally from a financial institution) that allows you to repay your debts to several or all of your creditors at once.
You are then left with only one outstanding loan — to the financial institution. In addition to streamlining your debts into a single payment, a debt consolidation loan may also offer you an interest rate that is lower than that charged by your creditors saving you money in interest charges.
What does a debt consolidation mean to you?
This option can be especially attractive if you have outstanding debts at a relatively high rate of interest (for example, those charged on some retail store cards or credit cards). You must ask your financial institution for a loan equal to the amount of your total outstanding debts that are currently due. In most cases, the financial institution will settle all the debts for you and, in return, the only monthly payment you will have to make will be to them.
It does not cost anything to apply for a loan in order to consolidate all your debts. However, a fee may be charged to open your file. Inquire at the financial institution that you choose.
Contact several financial institutions before you choose a consolidation loan since the interest rates offered by competing financial institutions may vary.
The potential problems with debt consolidation:
In most cases, the amount to be paid and/or the length of time increases, in order for you to make one easy payment per month. This means you’ll be paying back more money in the long run.This can also involve attaching more collateral, or having to obtain a co-signer to take responsibility for the loan. If you are not able to make a payment on your debt consolidation plan, your collateral will be used as payment, and it may make your consolidation plan null and void.
When you enroll in OCCA’s debt relief program our counselors will immediately begin negotiating each of your debts with your creditors. Tailoring a repayment plan you can afford will not require a co-signer or secured collateral. In addition, should your financial circumstances change for the worse; we will renegotiate your membership fee. Your membership at OCCA will not be ceased nor will negotiation with your creditors be hindered in any way..
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