Getting a Debt Consolidation Loan to Pay Off Tax Debts

What is debt consolidation? Debt consolidation is essentially a sort of debt refinancing which involves taking out one large loan to cover many others. This very commonly refers to the financial methodologies of people addressing large consumer debt, but sometimes it can also apply to the fiscal policy of a country dealing with debt from Government debt or corporate debt. The term debt consolidation was first used in the United States back in the 1930s. Ever since, debt consolidation has become a common enough practice in various forms of lending across the globe.

A debt consolidation plan may involve taking out a new loan, either by using your home as collateral or using some other collateral. You would then have a single monthly payment to make to the debt management company who would pay back everything you owe. If your credit rating has suffered somewhat over the years, then you may also want to consider debt settlement as an alternative to debt consolidation - at least if your current circumstances warrant such an option.

One way to find out just how much it will cost you to consolidate everything you owe is to use a debt consolidation calculator. This can be found online and is really quite simple. All you need to do is provide the amount you currently owe and then any number of different factors such as interest rates and annual fees and you will get a figure representing what your payments would be. You will then see how much it will cost to consolidate everything into one single payment.

Once you know how much it is going to cost you to pay back everything, you can start working out how long it will take you to achieve debt consolidation. If your debts are mainly centered around one single credit card, say your credit card company, then you probably only need to pay back the principal. In some cases you might only have to make one monthly debt consolidation payment. If you own something with a large interest rate like a house, then you will probably have to make more debt consolidation payments to cover the interest on that one. Again, this all depends on the individual case. It is important to remember that once you have qualified for debt consolidation, your debts will not go down - they will stay the same size or increase slightly.

There is an additional method that you can use for debt consolidation really only deals with debt elimination. This involves taking out another loan in order to repay your existing debt. In order to qualify, you need to be earning a good salary. You will have to prove that you cannot possibly pay back the loan on its current terms. The other option available for debt consolidation really only works if you have very poor credit - in this case, a debt consolidation loan is not worth pursuing.

A debt consolidation loan is very similar to a debt consolidation program in that you are simply adding together all of your current debt into one single, easy to manage loan. In fact, the new financing will be easier to pay back since you are only making one payment per month. The other big difference is that you are actually adding together all of your debts and not just taking out a new loan. In a debt consolidation program you are basically taking out a new line of credit. However, with the consolidation loan, you are actually adding together all of your debt into one easy to manage loan.

Another big advantage of a debt consolidation program is that your interest rates will decrease significantly since you are now only making one monthly payment. When you first get the financing, your interest rates can be quite high - especially since the new loan will also be secured with your home or car equity. When you eventually get out of debt and are able to refinance your home or car, you will have significantly lower interest rates than what you were paying prior to consolidating your debt.

In conclusion, if you are drowning in multiple payday loans, department store cards, credit card debt, or any other type of unsecured debt, a debt consolidation program may be able to help. If you take the time and research each company thoroughly, you may be able to find a company that specializes in helping people like you. The interest rates may be a little bit higher than going with a company that specializes in helping people with tax debt, however. Before accepting any offer, always make sure that there are no strings attached and that you understand exactly what you are getting yourself into. It is always best to stick with a company that specializes in personal debt consolidation loan programs.