Tax Law Term “Debt Consolidation“
The act or process of uniting outstanding debt by extinguishing the existing loans and creating a single new debt. In general, debt consolidation is a nontaxable event. Consolidated debt replacing multiple creditors with a single creditor may often be secured on more favorable terms than existing debt, thereby reducing debt service payments and interest expenses. In some cases nondeductible interest payments may be replaced by deductible interest payments.
Debt consolidation is the combination of several unsecured debts—payday loans, credit cards, medical bills—into one monthly bill with the illusion of a lower interest rate, lower monthly payment and simplified debt relief plan. DaveRamsey
Debt consolidation is a form of debt refinancing that entails taking out one loan to pay off many others. This commonly refers to a personal finance process of individuals addressing high consumer debt but occasionally refers to a country’s fiscal approach to corporate debt or Government debt. The process can secure a lower overall interest rate to the entire debt load and provide the convenience of servicing only one loan. Wikipedia
Debt consolidation means taking out a new loan to pay off a number of liabilities and consumer debts, generally unsecured ones. In effect, multiple debts are combined into a single, larger piece of debt, usually with more favorable payoff terms: a lower interest rate, lower monthly payment or both. Consumers can use debt consolidation as a tool to deal with student loan debt, credit card debt and other types of debt. Investopedia
Debt consolidation is a sensible solution for consumers overwhelmed by credit card debt. It can be done with or without a loan. Consolidation cuts costs by lowering the interest rate on debts and reducing monthly payments.
Debt consolidation is a financial strategy, merging multiple bills into a single debt that is paid off by a loan or through a management program. Debt.org
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