Vera Crash

There was a time not so long ago when people could turn to a relatively straightforward choice to solve their unsecured debt problems. The choice in question was a debt consolidation loan, and whether or not they would be able to qualify for it was not something they were overly worried about. People now find it almost impossible to be eligible for a a loan of this kind to take care of their high interest credit card accounts as a result of the profound changes that have occurred within the lending industry. Lenders are now examining loan applications as never before in order to avoid approving any more risky loans, as they now find themselves on the defensive due to the sheer number of foreclosures, bankruptcies and other bad debts. Many consumers have understandably abandoned completely on the idea of trying to consolidate their debt at lower interest rates as so many have been turned down for these debt consolidation loans. But consumers actually do still have the ability to secure the benefits of debt consolidation for themselves, so this is actually just an overreaction to a difficult situation. Only now they no longer need to qualify for a loan, but instead can get these benefits by going through a debt relief company that offers credit counseling. In credit counseling (one of the credit card debt solutions available) they will have access to a debt management plan (DMP) that will provide them with the desired debt consolidation benefits as well as a number of others.

A lower interest rate and a consolidated monthly payment, which are the two principal benefits of debt consolidation, are both offered to consumers in a DMP. The primary differences are that the debts themselves are not actually combined as they would be in a debt consolidation loan, and the consolidated monthly payment goes to the debt relief company. The obligation for distributing the proper payment to each of the creditors falls on the debt relief company. But there are even more debt relief advantages for the consumer. Bringing an end to collection phone calls, an end to over-limit and late fees, reduced payoff schedules of just five years or less, and having no worries about suffering credit score damage from participating in the DMP are other ways in which they will benefit. The intense credit damage brought on by debt solutions, like debt settlement and bankruptcy separate them from the DMP on this issue. Bankruptcy’s credit damage can usually be expected to last from 7 to 10 years and may hamper the consumer’s ability to land a new job with some employers, which is another consideration that cannot be taken lightly in the current economy.