>> Nov 22, 2016
Commercial jargons can be quite confusing for the common man. Even when the simplest of things is being talked about, jargons can be so baffling that nothing can be made out of it. In this article, we will try to clear the confusion at least for one particular topic.
The money market and the commercial world are rife with such jargons that have almost become the word of mouth. Yet not everybody can make sense of it. Many people can vaguely make out what is being talked about by deciphering the name with the help of common sense. However, the real meaning of the phrase in its technical sense remains elusive and unknown. The most commonly known term debt is annotated in several ways depending on the circumstances of use. Read on to unravel the meaning of debt consolidation that you often hear about.
In simple terms
Debt consolidation meaning in simple terms is the process of recouping finances. This term or phrase is usually applicable in the area of personal finance. However, in many instances it may be referred to bigger areas like government debt or corporate debt. When an individual or company is neck deep in debts from various sources and does not have the means of repayment, as a last gamble, he or she can think about taking a bigger loan to pay of all or majority of outstanding debts. This is particularly relevant for credit card debts and unpaid medical bills that can keep spiraling.
Credit counseling agency
If you are happy to know the meaning of debt consolidation, there is something more that you should know about its administration. This is a payment system that is based on third party. The third party that manages the show is known as credit counseling agency. How well the finances are managed and help to meet your goals of debt repayment depends on the right selection of the third party that is responsible for paying to the creditors. The credit counseling agency has links with finance companies and can arrange for cheap loans at lower interest rates. This ensures that the major part of money that you receive goes towards the balance payment instead of being consumed as finance charges.
Is debt consolidation meant for all?
The plan works well if your balances are in unsecured debts like personal loans and credit cards. If you owe on account of unpaid child support, unpaid taxes or even unpaid parking tickets then this arrangement will not work. To avail this facility you have to ensure that you have enough money to meet essential expenses as well as some savings. Most importantly, you should have the capability to continue paying for long term.
The best part of the arrangement is that you have to pay out a fixed sum of money every month. There are no surprises whatsoever that can make you trip. Once you make up your mind to avail the facility, discuss with a counselor to make sure that it is the best option for you.