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Vital questions to consider when applying for debt consolidation

If you were thinking about getting the assistance of some debt relief program, then going for a debt consolidation loan will be of immense benefit to you. A debt consolidation loan can help in putting an end to the financial issues that you have been suffering from. 

But prior to applying for the debt consolidation loan, it is natural for an applicant to have some doubts and questions. These are several things you need to take care of. This article will help you learn about some of the essential processes that are involved in the debt consolidation procedure and help answer some of those doubts.

  • Will a debt consolidation loan result in impacting the tax amounts which you require to pay?

Every financial institution will have to go and report all the debts or the canceled debts that have been lying in their accounts when the amount is over five hundred and fifty dollars to the relevant tax collecting agencies like the IRS. The debtors are also required to report all the additional incomes which they have had had when they are filing their taxes. However, the IRS is also required to provide you with a chance to offset a part of your income from the canceled debts which you have till the time you finally reach the specific amount where you have become neither insolvent nor had your debts all canceled out. 

The process of insolvency will be implemented when the amount of money that you owe is more than what you have in your account. As a result of this, you will go on to have negative values in your net value. It is primarily the rate of interest which you are required to pay if your debt balances are forgiven. However, there can be a few exceptions in this scenario. Suppose, an individual has a certain amount of money in the form of home equity, and they want to have a positive net value in order to lower their chances of insolvency. But this is an exception only, and specific rules would not be permitted here. There can also be a few situations in which you are required to pay up taxes on your debt balances that had been previously forgiven.

  • What are the chances of your wages being garnished off?

You may find a certain group of debt collectors that might try to indulge in scaremongering tactics and even try in fooling you in thinking that they have the legal authority to take control of your working salaries and payments if you are not going to repay them their loan installments within a certain time period. The chances of people feeling emotionally overwhelmed are high if the authorities make such claims of taking away their hard-earned salaries. Salary garnishment can be an extremely scary situation when individuals are also suffering from different types of financial problems and issues. 

However, you should understand that this is only a scare tactic, and this is used to intimidate the debtor by the debt collection agencies. This is done only to force individuals in making their installment payments on a more punctual basis and ensure that all the loans get repaid by every mean that is possible. So you need not be scared of suffering from salary garnishment.

  • A debt consolidation loan can consider which specific types of debts under its broad spectrum?

You should understand that the debt consolidation system considers every form of unsecured and even secured debts under its umbrella. You will be able to consolidate almost all types of unsecured debts which you have from various sources in your debt consolidation loan. Unsecured debts are primarily used to refer to those forms of debts in which there are no collaterals provided by the debtor to the creditor which they can take repossession of in the future in case of non-repayment of loans. 

These collaterals are mostly in the form of material possessions of the debtor. This can include their vehicles, jewelry, house, and so on. The creditor has the legal right to repossess these items when a debtor fails to repay the loans. But when such collaterals are not provided, then it becomes an unsecured debt. You are legally allowed to include the medical bills, bills from credit card purchases, grocery store bills, and such other bills in a debt consolidation loan. 

The unsecured loans like a student loan, a credit line, a signed loan may also get included in the debt consolidation loan. Student loans will cover only those loans which are not part of any government-backed packages and schemes. Private student loans that have not been sponsored by any government body will be included as well.

  • Are the procedures involved in debt consolidation loans totally different from the ones used for credit card processing?

The mode of implementation might have a few noticeable differences in them, and this can seem that the two processes are inherently separate. In the credit counseling procedures, you will have to write the debt balances which you have along with the interest amounts that you have incurred. But the debt consolidation will help you in lowering the interest rates that you are required to pay out to the creditors after the consolidation of your loan.

In the event that you would like to get more information about debt relief programs and debt consolidation loans in general, then you must visit nationaldebtrelief.com where you can get all your queries answered by the most expert professionals of this industry. 

Conclusion

It is common for people to go through financial problems and difficulties. Debt relief programs like the debt consolidation loans would be of immense help to them for this reason. Such loans will be a helpful method to settle old unpaid debts. It can reduce your financial burden and let you be financially independent in the end. Hopefully; this article will have helped you to learn more about the debt consolidation loans.

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