Many prefer the option of debt consolidation to get rid of their unsecured debts. Actually, debt consolidation means borrowing additional funds at lower rate of interest to get rid of other debts. The main advantage is that rather than having a couple of debts at the same time and paying a number of bills every month, you just need to deal with one loan. Additionally, you can request for a fresh loan having lower rate of interest in place of paying liabilities, carrying higher rate of interest.
How to consolidate?
Getting your original mortgage refinanced is among the most helpful ways of consolidating your debts and avoiding bankruptcy. This option allows you to get rid of liabilities carrying higher rates of interest. You may explore the likelihood of borrowing funds from relatives or friends at a lower rate of interest.
Home Equity Loans
Majority of debt collection loans obtained are treated as home equity loans. You may consider getting these against equity of your present home to liquidate rest of the unsecured debts. In this manner, these are renewed as secured ones. You also get the benefit of prolonging the time for paying your debts. The interest applicable for them is fairly lower, compared to credit card or personal loans. Nevertheless, should you be unable to pay instalments regularly, you stand the risk of losing your property.