What is Debit Consolidation?

Debit consolidation is the practice of taking many loans and combining them into one, lower interest rate loan. This can be done to lower payments or simply to gain the convenience of dealing with only one company when making payments.

Debit consolidation can involve either secured or unsecured loans. In some instances, the borrower uses their house as collateral to combine many unsecured debits into a lower interest rate secured loan. This is referred to as collateralization. Keep in mind, when you take this route to consolidate your debit, you are legally obligated to sell the collateral if you cannot pay back the loan. This is commonly referred to as foreclosure.

In other scenarios, a debit consolidation company will buy at-risk debit from the lending company at a discount. A good debit consolidation company will attempt to pass some of these savings on to their customers. Unscrupulous ones will not.

Often, companies will attempt to charge very high fees when offering debit consolidation loans - sometimes the maximum allowed by the state. Be wary of these companies, and also avoid waiting until the last minute to consolidate your debit. You may not have time to shop around to find an honest company and be forced to accept usurious rates from a predatory lender.

The basic rules of debit consolidation are simple: don't wait till the last minute and don't use something as collateral that you can't live without.

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