In the world of personal finances, we all have struggles from time to time. It’s hardly ever intentional, but we do have a tendency to make poor financial decisions for a variety of reasons.

One of the biggest issues facing people in industrialized countries is mounting credit card debt. Even with the best intentions, a lot of people use their credit cards instead of cash only to fall into the trap of making minimum payments against cards with hefty interest rates. Once someone becomes over reliant on credit cards, the cycle of mounting debt begins.

When someone finds themselves unable to manage their way out from under the grip of credit card companies, stress builds and possible solutions fall by the waste side. Without broaching the subjects of debt forgiveness and bankruptcy, both of which cause significant financial damage, there is a viable solution called debt consolidation.

How Does Debt Consolidation Work?

If a debtor finds themselves with their back against a financial wall because of unsecured credit card debt, debt consolidation is a possible solution as long as the borrower is willing and able to aside by a new set of borrowing rules.

It will require the same level of patience and responsibility as dealing with a structured settlement. There’s plenty of folks who win lawsuits and get their settlements in one lump sum only to have that money slip through their fingers like hot butter through a fork. A structured settlement allows the beneficiary to make sure they are covered for an extended amount of time, giving them financial freedom for years instead of days. Experts at Fundfirst Capital list the best structured settlement companies, we recommend working with a trusted company in order to get the cash you deserve.

A debt consolidation loan works in similar fashion. Instead of the debtor having to continually battle creditors while trying to manage high interest rates, large monthly payment and multiple monthly payments, they can relax and spread their debt issues over a more manageable period of time. It gives them a sense of financial freedom.

Here’s how it works. A prospective borrower approaches a debt consolidation lender about fixing their debt issues. As long as the borrower’s credit rating hasn’t fallen off a cliff, they should qualify for said loan. The lender will pay off the borrower’s unsecured debt over all unsecured lenders, replacing that debt with a single loan and single monthly payment. This will usually result is a lower monthly payment and perhaps a lower aggregate interest rate. In the long run, the borrower can fix their credit standing as long as they abide the new terms and don’t incur more debt in the future.