The financial crisis or the economic downturn of 2008 saw not only the bottom fall out of the real estate market but the high-interest rates also had its impact on the creditworthiness of several other people outside the housing loan / mortgage finance segment. Personal debts also increased multi-fold with people looking at increased payouts primarily from payouts towards credit card outstanding amounts. In addition, rising costs of utilities, retail shopping and medical bills forced many to borrow to pay their bills. The resulting situation was a high degree of unsecured debts which left even many high-earning individuals in dire straits as losses accumulated and assets fell short of their market value.
There are many debt relief options to help deal with unsecured debts; one of them is availing a Debt Solidification Loan. But understanding what a debt Solidification loan provides in terms on debt relief is very important so as to analyze all the options.
A debt Solidification loan is only a part of the debt relief process – other options include Debt Settlement and at the worst level, Bankruptcy.
Let’s take a look at what a debt Solidification loan involves.
Typically, it means combining or putting together all high-interest credit card dues into a much lower interest loan payout. It can also mean ‘Solidification’ of all credit card dues into a more structured and manageable payout schedule to a credit counseling agency, which in turn dispenses payments to individual creditors.
Debt Settlement is another option of debt relief where there is the hope of negotiating outstanding payments with creditors to arrive at a substantially less payout than the actual debt. These debt relief methods are providing alternate means to declaring a person ‘bankrupt’ which has a damaging and devastating impact on personal credit in the long-term.