These days debt consolidation has become quite a common practice among many tanks and various financial institutions. One of the basic steps of intimating this practice is to create a win-win situation for both the debtor and the bank. Here bank usually provides some leverages to the big debtor who are having multiple debts on various banks. This is been done because of a threat of loosing money to the debtor as bad debts or bed loans. Usually a debtor who has borrowed multiple loans either from the same bank or from the multiple banks is offered a debt consolidation by one of the bank in order to retain the loan amount which is due on the debtor. The bank also provides an opportunity to the debtor to full fill his/her financial liability by paying off the full loan which is due on him of various banks.
Although, debt consolidation is not as much beneficial to the creditor as it is beneficial to the debtor. Most of the time bank or a financial institution that is offering debt consolidation to the party often has to wave some if the unearned interest to the grieved party. But, in the long term it seems to be a good choice because it prevents bank for a possible bad loan settlement and saves lot if loan recovery cost.
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