You’ve heard of debt consolidation loans, but did you know that the government offers consolidation loans to help people pay off their debts too? Most often, this type of loan is used to help college graduates consolidate their student loans into one manageable loan that usually has a lower interest rate and, therefore, reduced payments. What happens is that the government, or a consolidation agency, pays off the outstanding debt(s) and the borrower is then left with just one loan to pay off. Fortunately, the lower interest government debt consolidation loan usually makes these payments much more manageable.
This sounds great, right?
In a very few cases, government debt consolidation loans may also be offered to non-students/graduates who are in debt, and who qualify. But these is a catch to this type of borrowing because you are usually required to put your home up as collateral for your government debt consolidation loan. You must be careful before you decide to go this route, if you don’t make your payments on time each month, you could lose your home. That being said, though, if you are able to maintain regular repayments, you will, usually, prevent your credit score from being damaged due to struggling to keep up with the more costly payments of the original loan(s). In general, a government debt consolidation loan will save you from ruining your credit, as long as you keep up with the payments.
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