Debt Consolidation,debt-free life
In the event that you are someone who is struggling to make repayments for your debts, then you shall be finding this article quite handy. There are plenty of people who have to take loans for a lot of different purposes, some for their business-related purposes, and others for their personal reasons. For these people, there are a lot of debt relief services which offer ways to come out of debts through the design of specific plans that will help them to settle their debts. A lot of different financial companies and agencies offer these services in charge of a fee.
But there are a lot of scam companies also which cheat customers of their money and do not solve their debt related problems at all. Fortunately for them, there are a lot of debt relief laws that protect their rights, this article will help to let you learn about them.
Why take a debt consolidation loan?
A debt consolidation loan is one of the methods to help you come out of your debts. Debt consolidation is a legitimate method of debt relief service. It involves the consolidation of the multiple loans that you have taken into a single loan and then repaying that one loan. In general situations, a debt settlement company will come and offer you this loan, and they will take up the responsibility of paying out to your separate creditors the money that is owed by you to them.
Debt consolidation is a popular method of debt relief service because of two primary reasons:
- Firstly, they help to reduce the rate of interest that you have to pay, thereby helping you to save more money. For instance, if you had to pay your different creditors a rate of interest like 7 percent on an average for the multiple amounts that you owed them, then under a debt consolidation loan you will have to pay a reduced interest amount of, let us say, 5 percent to the single debt consolidation loan offering agency. This will help you save up on a lot of money in the long run.
- The second reason is that a debt consolidation loan will extend the duration of your repayment considerably to enable you to pay off your debts with relative ease. Thus, if earlier you had to repay your loans within two years, a debt consolidation loan will extend it to around four years, on an average, with a reduced interest rate.
There are two different types of debt consolidation loans: secured and unsecured. In a secured debt consolidation loan, you shall be required to provide some sort of material wealth of yours as collateral. Like, for instance, your house or your vehicle. These types of debt consolidation loans are easier to get. In an unsecured debt consolidation loan, you are not required to provide any collateral, which can get later claimed by the loan providing company, and instead, the company will give you a loan based on your financial conditions. In these types of debt consolidation loans, it is important that you should have a good financial credit score. This means that you must not have too much of outstanding credits like unpaid credit card bills remaining.
How can debt consolidation companies still cheat people?
In spite of the advantages that a debt consolidation loan offers you, there are a lot of people who are afraid to use these services. The main reason for this is that there are a lot of fraudulent and scamming companies which do not adhere to what they state in their advertisements. For instance, there have been incidents where debt consolidation firms have been known to ask customers additional fees later on which they had not mentioned earlier. Also, some companies take the money from a customer, but they do not repay the original creditors at all. This leaves behind a huge trust deficit later on as the paying customer will get sucked into deeper debt and a worse financial crisis than what he was in earlier on. Hence, there are in place a number of debt relief laws which provide some respite to customers and protect them from getting cheated on by the debt consolidation loan providing company.
Instances of specific laws designed to protect consumer rights
Every government, both in the national front and in the specific states have different laws to regulate debt consolidation loan offering agencies. These laws help to provide respite to the paying customer that his money is not being wasted.
Some provisions under these laws include the following:
- The debt consolidation loan providing company shall have to be a firm that is authorized and certified by specific government agencies to undertake such debt relief providing financial transactions.
- The debt consolidation agency is required to provide you in writing the exact specific details of the deals that have been made by them with you, this will specify the exact costs that you are required to pay, the exact rate of interest that is levied and the exact duration in which you need to make the repayment.
- The company must also specify what steps they are going to take should you fail to make the repayments on time.
- It is also expected of the company to send you written correspondences informing you that your payments are due or that you have missed your repayment date within at least five days.
- Under no circumstance, shall a company call you and harass you for the repayment.
- The company is also required to you to show you that they have settled the repayment deal with the individual creditors that you had originally. This will ensure that the company is now responsible for repaying those loans, and you are absolved of any further responsibilities regarding those loans. You can learn more about debt consolidation at www.nationaldebtrelief.com.
Debt consolidation laws help to protect customer rights and secure their financial well-being. Hopefully, the information mentioned in this article will have helped you.