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What is consolidation, reunification or unification of debts?

December 9th, 2016 by eldecoin under deuda

If we were forced to take action with our debts, there is the possibility of debt consolidation in a single and long term, which would reduce the monthly payment.

To carry it out you need to own some property that will be mortgaged, be able to pay the unified amount, have a steady income, and may a guarantor.

The amount to be paid is considerably reduced as we stop paying interest on each debt and because the interest on the mortgage is lower than other loans.

Definition of debt consolidation: The consolidation of debts consists of obtaining a loan to pay other loans and / or credits (credit card, etc.). With debt consolidation you can pay off several debts in a single monthly payment. Debt consolidation is just one of the solutions to reduce your debts.

The desire to possess material things has made people have major debt problems today. Debts happen mostly because of the uncontrolled and impulsive spending of a person beyond their means.

It is important to get rid of debts, because if you get to have large debts you can damage your financial history or even lose your home. But every problem has a solution, millions of people have transformed their debts into a learning experience and have been able to pay them off.

Debt consolidation is one of the solutions to get rid of all your debts.

What is Debt Consolidation?

Consolidation, reunification or unification of debts is a process that allows you to convert all your monthly payments into a single payment less than the sum of all your current monthly payments, hence the term consolidate or unify, because it groups all your debts into one.

In order to carry out the consolidation it is necessary that you are the owner of some property, even if it is mortgaged. Unification consists of mortgaging your property or renegotiating the mortgage you currently have to pay your other debts. There are also companies that grant loans to carry out the consolidation, but you have to be very careful if you take this path.

When you cancel other debts, and since the interest rate on mortgages is much lower than that on personal loans, credit cards, etc., you save a lot of money on interest, so your debt is reduced. When you reduce your debt the only monthly fee you will have to pay after reunification is usually also lower than the sum of all that you paid before.

Ultimately, what you get with debt reunification is to convert all your current debts, whether long or short term, into a single minor and long term debt, and with it, pay less each month.

Requirements for Debt Consolidation

A copy of your monthly expenses, to present it at the bank and see if you are able to pay the monthly unified amount.
You must have stable monthly income to repay the loan.
You may need a co-signer (a person who signs as being responsible for your payments if you do not) or a material guarantee, such as a house or a car.

Types of Debts Eliminated with Debt Consolidation

Debt consolidation loans are usually granted to pay off any of the following debts:

Credit card debt.
Medical debt.
Card debts granted by commercial entities.
Personal loans.
Loans for studies.
Checks rejected.