Consolidate Your Debt Early To Avoid Foreclosure

Thus, it is advisable to use debt consolidation to prevent foreclosure and bankruptcy rather than to stop them when the processes have already started or are about to start. In any case, debt consolidation can help you restore your finances and escape from those menaces. Let us see how you can obtain debt relief by consolidating your debt and drive away foreclosure and bankruptcy for ever:

What Triggers Foreclosure?

Foreclosure requires you to default on a secured loan. Thus, to avoid foreclosure you need to pay the installments of your secured loans on time. The processes of collection for unsecured debt are far more complicated. Thus, the repayment of secured debt like home mortgages or car loans should always come first on your priority list. However, it may happen that you can not afford the mortgage payments any longer or that you need to make sacrifices to do so. That can imply to stop paying other debt with the negative consequences on your credit that this implies.

If you think that you are reaching such a stage it is best for you to consolidate your debt. With debt consolidation all your debt will be negotiated and thus, the consolidation agency will make sure that you can afford the resulting monthly payment. Otherwise, when you decide to refinance or renegotiate your mortgage, it may be too late because the missed payments or late payments on other debts and bills will have ruined your credit.

What To Expect From Debt Consolidation?

When you get into a debt consolidation program, all your debt gets renegotiated. Some debt (especially loans with subsidized rates) can be excluded from negotiation due to already having advantageous terms. Since lenders know that collecting at a lower pace or with smaller profits is far better than not collecting at all, they will be more than willing to agree with the debt consolidation agency new terms on your debts.

And even though the creditor that holds the collateral is already protected by it from lack of payment, the legal processes that are needed for obtaining repossession are complicated, time consuming and expensive. Thus, chances are that the creditor will be disposed to reconsider the repayment program and offer lower monthly payments so you can afford them without sacrifices and avoid foreclosure.

Debt consolidation done on time, can not only protect your from foreclosure and bankruptcy but also restore your credit and finances. Lower monthly payments will let you become debt free even if it takes some time. Also, if your financial situation improves, you can always pay your debt sooner. Moreover, even though your credit score will suffer at first, in the long run, both your credit history and score will improve letting you obtain financial products with much better terms.