Getting Out of Debt | Finance Shire

There are many people, mostly the average citizens around the Western economic bloc, who were incredibly hard hit during the economic recession of the past five or six years. These people as a whole have accumulated a great deal of debt that they are still paying back, and many of them do not have a way to start reversing their situations.

Many of these people may think that declaring bankruptcy and allowing the court system to determine their debt restructuring with their creditors is the only way. Of course, the declaration of bankruptcy puts a huge white smear over the long term financial records of anyone who goes through it, and the process in and of itself is not a cakewalk.

However, there are other options, namely, different forms of debt consolidation. Using a technique known as a secured loan consolidation with a house as a security backup, borrowers can take advantage of their home equity to receive what amounts to a line of credit known as a second mortgage.

What this additional mortgage makes it possible to do for the borrower is to reduce either the interest rate or the payment period on the debt incurred, and if the process is put into the hands of an especially adept professional debt relief partner, it is possible to get both of these written into the policy.

The other main characteristic of debt consolidation with private mortgages is that they must usually be sold to a new creditor after consolidation. For this to work successfully, usually the borrower will have to meet at least a minimum threshold for a long term credit score. In return, the lender will usually not only lower the interest rate and expand the payback period, but also sometimes forgive a portion of the debt as well.

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Source: http://financeshire.com/2012/02/getting-out-of-debt/

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