Graduates Beware! Do Not Consolidate Student Loans Without Proper Research!

Are you a student thinking about loan consolidation? You must conduct proper research prior to consolidating your student loans. Loan consolidation is not an easy task and requires careful consideration and research. It is essential that you equip yourself with proper knowledge and information about student loan consolidation in order to avail the best possible consolidation plan perfect for your needs.

Why Consolidate Student Loans?

A great scholar once said three kinds of things are a source of happiness for individuals – Good Health, Freedom from Debt and Clear Conscious. Student loan consolidation is the Holy Grail for debt-ridden students that help them attain that elusive happiness. It provides relief from the burden of debt and prevents defaulting on these loans.

Loan consolidation provides numerous benefits to students. Some of these benefits include:
1. Fixates interest rates for the duration of the loan
2. Consolidates multiple loan payments into single monthly payment
3. Offers the flexibility of paying loan amounts according to monthly income
4. Does not require good credit score to qualify for the consolidation plan
5. Enables you to set your financial goals for gradual retirement of the loan amount

Read these effective tips on student loan consolidation to understand how to get the best terms and conditions for refinancing the loans to match your needs.

Research Tip #1 Find out the Impact of Consolidating Student Loans
Before consolidating the loans, you should find out the effect of merging multiple loans with different terms and conditions. Sometimes the different interest rate on these loans increases the debt burden on consolidating the loans.
For example, consolidation of Harvard and Perkins loans results in increased interest payment rather than reduce payments on consolidation. Whereas, Stafford loans can easily be consolidated without losing any benefit of consolidation.
Hence, you should research properly and determine the impact of consolidating the loans before applying for the program.

Research Tip #2: Avoid Joint Consolidation of Loans
Join consolidation refers to merging student loans of two or more individuals. In case you and your spouse are both burdened with student debt, you should research properly before considering the option of joint consolidation. Instead of sharing the debt burden, joint consolidation doubles the strain of financing the loan in the long term. The reason is that joint consolidation treats the partners as two individuals and not one. So, in cases of unemployment or uneventful demise of one of the partners they cannot apply for deferment of payment unless both of them become unemployed or pass away. Furthermore, in cases of divorce, it will create difficulties in case one ex-partner does not pay the required amount on time.

Research Tip #3 Find out Tax Benefits on Student Loans
US citizens can avail tax reduction according to IRS income form 1040 and 1040A. You should study these sections properly to find out how much tax benefit you can avail apropos to your student loans. Through proper research, you can find out how to avail tax reduction of as much as $2,500 to your student loans.

The task of consolidating the loans can be a difficult process for most students. That is why a professional student loan consolidation experts can help you maximize the benefits associated with consolidating the loans. These experts can provide qualified advice and guidance so that you can obtain the most advantageous refinance terms and conditions on student loan consolidation.


What Can You Do If Your Student Loan Amount is certified for Student Loan Tax Refund Offset?

Like most people, graduation may be the most memorable occasion in your life. You studied hard to keep up your grades; you sacrificed your time to complete your course work; and you may even have had to go through the process of availing your student loan to cover all your course fees. All this effort culminates in achieving a college degree on graduation day!

However, the warm feeling of finally earning a degree wears off quickly once you find yourself surrounded by huge pile of student debt. Most loan repayment plans commence about six months after graduation. But finding a job with a salary high enough to pay the loan installment amount due is not an easy task. It takes most graduates quite some time to secure a decent paying job. Unfortunately, all too often the defaulted loan ends up on the desk of a debt collection agency.

Some Student Loans Become Certified for Tax Refund Offset

In the U.S., the Department of Education (DOE) refers all defaulted student loan debt claims to the Department of Treasury. The treasury department can request the IRS to offset the loan amount against federal and/or state tax refunds. Tax refund offset means that your state or federal tax refunds would be used to make payments of the student loan amount that is due.

Once the DOE requests the treasury department to collect student loan due from the delinquent borrower, the defaulted student loan becomes certified for tax refund offset. The certified status remains as long as the student loan amount remains due from the borrower or it is legally discharged in the event of bankruptcy.

The certified status of the student loan cannot be made void by making voluntary payments in lieu of the loan installment amount. You may offset the certified student loan tax offset status through payment of the loan amount in full, consolidation, rehabilitation, or settlement for partial payment or cancellation of the loan amount. In other words, the delinquent borrower would have to bring the student loan due back to the current status if he or she would like to remove it from the certified tax refund status.

How Can I Check If My Student Loan Amount Is Certified For Tax Refund Offsets?

Under the current U.S. laws, you would receive a tax refund offset notice from the IRS at the specified mail address. You can then file a request with the Department of Education to review your tax refund status. However, in case you have not updated your current address with the IRS, you may not receive the notice of the student loan tax refund offset.

You can check the status of your federal student loan payable by contacting the Department of Education directly. The DOE will refer you to the assigned debt collection agency that currently holds your debt. You can also contact the Treasury Offset Program (TOP) call center to know whether you student loan amount is certified for tax refund offset.

Department of Education’s customer service number: (800) 621-3115
Treasury Department’s designated offset call center: (800) 304-3107

You can also contact a private student loan consolidation company to discuss various student loan repayment options.


Top 5 Advantages of Consolidating Student Loan Debt

Graduation is no doubt one of the most memorable moments in a person’s life. It signals closing stages of the carefree life that we have become accustomed to and entering a more responsible phase of adulthood. However, graduation day also reminds us of the fact that the grace period for paying off those student loans is about to end after which you have to start making payments to back the loans.

Various financial assistance programs are available for graduates, to assist them with making payments on their student loans. Consolidating student loan debt offers various benefits in financing the loans.

Benefit #1: Streamlined Payment Process
One of the foremost benefits of consolidating student loan debt is that it streamlines your monthly loan payments. How is that possible? Consolidating the loans merges you previous loans into one single amount that you have to pay at a specified period. The lender who consolidates your loans will take care of you previous loans and issue a new loan with better loan terms and conditions. A streamlined payment process makes it easy for you to finance the loan and avoid the prospect of defaulting on payments, which has various repercussions.

Benefit #2: Reduced Interest Rates on Loans
Consolidating the loans usually results in reduced interest rates. Consolidating student loan debt entails a new interest rate that is calculated from the interest rates of previous loans. This normally results in overall reduction in interest payments on loans.

Benefit #3: Tax Benefits and Relief
Another benefit of consolidation loans is that it is tax deductible. This can offer savings in excess of $2,000. (Please refer to IRS Publication 970 chapter four for more details!) This greatly eases the debt burden and prevents defaulting.

Benefit #4: Extension in Repayment Term
Consolidating student loan debt also extends the payment period of loans, ultimately resulting in reduced monthly payments. This extended payment period means that you do not have to fret over any looming deadlines and that you can focus on making payments for the loan amount. This also allows you to save money for such necessities of life like your own home, retirement income, and a car.

Benefit #5: Fixed Interest Rate for the Loan Term
Student loan consolidation fixates interest rates for the duration of the loan. This allows you the luxury of knowing the exact monthly amount you have to pay to pay back your loans. You save yourself from any surprise increases in interest rates that might make financing a loan difficult.

The tasks and paper work required in student loan consolidation can be overwhelming and complex for many people. In order to obtain maximum benefit from consolidating your loans, it is important that you should get professional guidance and advice. Qualify with a service provider and see how you can benefit.


Learn How to Challenge and Avoid Student Loan Tax Refund Offset

If you obtain a notice of tax refund offset for a student loan, you can challenge it on various grounds.

Did you know that defaulting on your student loan could have serious consequences? If you fall into default, you put yourself at risk of having your tax refunds taken away by federal and state authorities.

How Does a Tax Refund Offset Happen?

Computer Records of debtors who have defaulted on their student loans are sent to the IRS. The federal revenue agency takes all or a part of the individual’s tax refunds and applies it to student loan debt. If you file a joint tax return, the IRS may even hold your spouse’s income tax refund.

The Department of Education initiates requests for tax refund for any of the following two reasons:

1.    Student Debt that is due to or guaranteed by the Department of Education
2.    Student Debt that is due to private lenders or guarantors who have contacted Department of Education

The IRS will send you an advance notice of the proposed tax offset, including the amount and nature of the outstanding debt. When you receive the tax offset notice, you can:

•    Request to inspect and copy student loan records within 20 days of receiving the notice,
•    Request to review the proposed tax offset within 65 days of receiving the notice or 15 additional days if you have requested to inspect your loan records

You must appeal directly to the Department of Education, if you want to review the proposed tax offset.

How to Challenge a Tax Refund Offset?

When sending a request for review, you must include your name, social security number, loan amount and a written objection to the debt. You must also specify whether you want to request a hearing in person, online or by telephone. Some of the reasons for which you can object to tax refund offset include:

* Student loan amount is already paid by you
* Student loan is cancelled or discharged in bankruptcy
* Mistake in crediting you with the student loan
* Wrong loan amount is posted in the notice
* Refund of student loan due because of closed school discharge or false certification discharge
* Borrower of the student loan amount is dead or permanently disabled
* Have entered into a written agreement with creditors to pay off the loan amount

How to Avoid Tax Refund Offset?

Generally, it is very difficult to get out of a tax refund offset. You can lessen the chances of tax refund offset by entering into a written agreement with your creditors or guarantors for repayment, consolidation, rehabilitation, or deferment of your student loan debt. Some ways to avoid the student loan tax refund offset include:

a. Repayment of Student Loan Amount

One way to avoid tax refund offsets is to pay the student loan amount in full. You can either pay the loan amount due under the original terms of condition or under a revised repayment plan. The repayment plans range from standard and fixed amount payment plans to income specific and income contingent payment plans.

b. Consolidation of Student Loan Amount

Another option to avoid tax refund offset is to consolidate your student loans. Student loan consolidation merges all your student loans into a single loan. The advantage of consolidating your loans is lower monthly payments in paying off the loans. Most federal student loans are eligible for consolidation. Two of the most popular student loan consolidation program includes:
•    Pay As You Earn (PAYE) and
•    Income Based Repayment Plan (IBR)

PAYE repayment plan is available for all loans availed on are after Oct. 01, 2007. Although it is the most generous loan consolidation plan, not every applicant qualifies for the program. The IBR student loan repayment plan adjusts the monthly loan amount based on what you earn. The payment amount can be as low as zero dollars if the discretionary income is not enough to meet the minimum monthly payment amount.

c. Rehabilitation of Student Loan Amount

Rehabilitation of your student loan is another option that you can consider to avoid student loan tax refund offsets. Under the loan rehabilitation program, you have to make around 9 voluntary payments of an agreed amount over a ten month period. This allows you to get your loan in good standing and avoid tax refund offset. Once the rehabilitation period is complete, you will have to make payments according to original terms and agreement of the student loan.

d. Deferment of Student Loan Amount

Finally, you can apply for deferment of the student loan to avoid tax refund offsets. During the deferment period, you do not have to make any payments on your loan amount. You may be eligible for deferment if you are:

•    Attending a rehabilitation program for disabled individuals
•    Enrolled in a graduate or post graduate fellowship program
•    Facing financial hardship
•    Unemployed and seeking a full time job

To find out more or to avoid tax refund offsets, visit the Student Loan Project and get your free consultation.

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Recognize the Downside Consolidating Student Loan Debt

If you are burdened with federal or private student loans, you may have heard about student loan consolidation programs that can offer relief from your debt. But before you apply for a loan assistance program, it is imperative that you know the cons of consolidating student loan debt. Understanding certain aspects of the student loan consolidation program helps you to gain greater benefits from the student loan program. Knowing the drawbacks of consolidating student loan debt will allow you to get a clear picture of getting optimal refinance terms and conditions suitable for your needs.

Drawback #1: Your Loan Amount May Increase on Consolidation

One of the cons attached with student loan consolidation is that the actual loan amount increases with consolidation. You get relief only in the form of lengthening the duration of the loans thereby paying reduced monthly installments on the loan. The overall loan amount increases as you might have to pay greater interest payment when you consolidate your loans.

However, the good news is that you could end up paying a lower interest rate on the consolidated loans. When you consolidate the loans, a new loan is created with revised terms and conditions. So, with proper research and guidance, you can agree on the “right” loan term and rates from the lenders. In addition, consolidated loans are tax deductible which means that you can save more than $2000 on the process.

Disadvantage #2: Your Loan May Get Locked Up with Fixed Interest Rate

Another drawback of student loan consolidation is that your loan amount may become locked with a fixed interest rate. Consolidation involves taking a weighted average of previous loans and fixes a new interest rate for the duration of the loan. Although this provides protection against rising interest rates in the future, you may not benefit if there is a decrease in interest rate.

However, fixing the interest rate allows you to know exactly how much payment you have to make without any surprises. You can effectively budget your finances with the peace of mind that the monthly loan payment will not increase in the future impacting other vital expenses. Consolidating your federal and private loans provides you with much needed financial relief and assistance. It gives you the flexibility of financing your outstanding loan and making payments for the necessities of life without much difficulty.
Are you qualified for student loan consolidation? Click here to see if you qualify for student debt relief.


Consolidating Student Loan Debt

About the Student Loan Consolidation Program

Student loan consolidation combines all of your previous loans into one single loan that is paid off at a specified date. The benefit of consolidating student loan debt is lower monthly payments to finance the debt. This also allows you enough time to get a steady and stable job to ensure that you easily pay off the debt within time. Consolidating your federal student loans requires that you fulfill certain criteria to become qualified

Federal Student Loans
You should be glad to hear that majority of government student loans are qualified for consolidation. Some of the federal student loans that are eligible for consolidation includes:

  • Supplemental Student Loan
  • PLUS Loans
  • Federal Nursing Loans
  • Direct Subsidized or Unsubsidized Loans
  • Health Education Loans
  • Subsidized and Unsubsidized Stafford Loans
  • Federal Perkins Loans
  • PLUS loans (Feel Program)

Fulfilling the Eligibility Criteria

You should note that you must fulfill certain conditions to become qualified for consolidating student loans. One of the conditions to avail this debt relief program is that at least one of the loans should be within the allowed grace period. Moreover, you have to make an agreement with your previous lenders relating to loans that you have failed to pay prior to consolidating student loans.

Prepare Yourself Before Applying for Consolidation
The importance of doing proper research before applying for consolidation cannot be emphasized enough. Although you may be qualified for consolidating, sometimes your debt burden increases with consolidation. Furthermore, you should remember that whether loan consolidation is right for you or not depends upon how much you can forego in order to get relief from your debt burden. Consolidating your student loans extends the repayment period that results in lower monthly payments, but it also increases the amount of interest rate on the loans.

Getting guidance from professional loan consolidation counselling firms is the best option to ensure that you get the best terms and conditions on consolidating your loans. After all, you want to get relief from your debt burden and not overburden yourself with debt.


Are You Thinking About Consolidating Student Loan Debt for a Private Loan?

Student loan consolidation allows you to get relief from the burden of debt. Thousands of students in US have benefited from the debt relief programs. Consolidating student loan debt reduces your monthly debt repayment, allowing you to finance your debt and avoid defaulting on the loans.

You have two options when consolidating student loan debt:
• Private Student Loans
• Federal Student Loans

Federal student loans are loans disbursed by government institutions, while private student loans are loans that are obtained from private institutions such as banks and other financial loan firms.

Statistics show that more and more US students are availing private student loans to fund their education. The problem is that repaying these loans is not an easy prospect, especially under the current economic scenario. It takes time for a graduating student to secure a profitable job and finance these loans. Student loan consolidation merges various student loans into a single loan and extends their repayment period. This lowers the monthly payment required to finance the debt, thus considerably easing the debt burden.

How You Can Consolidate Private Student Loans?
To consolidate private loans, you have to contact your original lenders and tell them that you are facing extreme difficulty in financing the debt. You should ask the lender to come up with new terms to extend the repayment period of the loans. Since lenders want their loans back, they will be open to any negotiation regarding the loans.

If you have multiple private student loans, you have to request any one of your lenders to pay all your other loans and come up with a new single loan payable at a specified future date.

You have to keep in mind that your FICO score will influence the interest rate that you obtain on consolidating these loans. It is highly recommended that you take the necessary steps to preserve this score. For instance, you could pay off the amount you owe on your credit card if it results in lowering the FICO score. You should also avoid missing the payment of your existing loans that could negatively affect the score. Maintaining a good FICO score is crucial in obtaining the best terms and condition for the consolidated loan.

Other Methods of Consolidating Student Loans

In case no lender is willing to negotiate the loans, then you should note that there are other options available for you to consolidate the loans. However, it requires some extra effort on your part.

• Obtain Additional Private Loans
You can obtain additional loans from different lenders to pay off your existing loans. The benefit of this option is that it merges all your private student loans into one loan resulting in a single monthly payment. It also extends the repayment period allowing you to finance the loan and avoid defaulting on the loan. However, obtaining additional loans also increases the interest rate that you have to pay during the duration of the loans.

•Utilize Credit Card Loans
Another option is to utilize credit card loans to pay off all your existing loans. The downside of this option is that it is an expensive option that may not give any benefits since the transfer rate itself comes to 3-5%. But the advantage of this option is that you have to make only one single payment resulting in fewer chances of missing the payments.

These are just some of the methods of consolidating your private student loans. You should note that consolidating private student loans entails greater complexity compared to federal student loan consolidation. That’s why it’s advisable to consult a professional consolidation adviser firm prior to taking any action in regards to consolidating your student  loan. This will allow you to avail the best option resulting in relief from the debt burden.

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Benefit From Private & Federal Student Loan Consolidation

Do you want to know how to get relief in making payment for your student loans? You’re in the right place! Here we will reveal to you the secrets of how to get relief from your student loan debt. Find out more about student debt relief programs that lessen the burden of your student loan financing, so that you can focus on the important things in life!

Student Loan Consolidation – Get Relief from Your Debt
Student loan consolidation is touted as the Holy Grail of getting relief from the shackles of student loans. This student debt relief program merges all your previous loans into one. Not only does it reduce the interest amount, but also the debt repayment duration also increases, which results in lower monthly installments. Generally, the type of loan you have determines the outcome of the loan consolidation program. Both private and federal student loans are treated differently on consolidation.

1. Private Loan Consolidation

Private loan consolidation is relatively difficult than federal loan consolidation. There are certain conditions that the loans have to fulfill to be eligible for consolidation. You must understand that some private loans cannot be consolidated as they do not fulfill the criteria of student loan consolidation. Even if they fulfill the eligibility criteria, sometime consolidating these loans results in increasing the debt burden rather than providing relief from the debt.

Interest rates on private loans are fixed using a weighted average of previous loans’ interest rates. That is why you have to know the correct time to consolidate these loans, so that it can result in securing the best rates. Ideally you should consolidate when the interest rate on loans are low to get the maximum benefit on consolidation. Proper research and timing is the key that can result in saving hundreds of dollars on consolidation. This is why consulting with a professional student loan consolidation company can be so beneficial. You should bear in mind that although you can secure a lower interest rate on consolidation, extending the loan duration means that the net loan amount is greater on consolidation. This happens due to the accumulation of interest rate with the passage of time that results in higher net amount of loan on consolidation. Apart from this, you should also note that your credit history also influences the terms and conditions of the loans. If your credit score is high, you can secure more lenient terms on consolidated loans as compared to a lower credit score.

2. Federal Student Loan Consolidation

The interest rate on federal student loans is secured with the rates set by the government. That is why the interest rate on federal loans is usually lower than private loans. The average interest rate on federal student loan consolidation is usually lower than consolidation of private student loans. For this same reason you should consolidate federal and private loans separately.
Separate consolidation of these loans allows you to retain lower interest rate of the federal loans and avoid the prospect of private loans bloating the interest rates on consolidation.

Moreover, you should note that unlike private student loans, your credit history does not have much bearing on terms and conditions of the federal student loan consolidation. The majority of federal loans are eligible for consolidation making it comparatively easier to consolidate them.

When considering private and federal student loan consolidation, you should get professional student debt relief advice and guidance to ensure that you get the best deal. Unless you have the time and patience to do extensive research about the best course of action relating to consolidation, it is better to let the professionals handle it.

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What Impacts Federal Student Loan Consolidation?

Federal student loan consolidation makes it easier for you to finance the loans and avoid defaulting on your payments. There are many important yet often misunderstood aspects of student loan consolidation that make federal student loan consolidation confusing. Read on to get some clarity on the process:

A Good Credit Score Positively Influences Debt Consolidation

A good credit score has a strong bearing on obtaining better terms and conditions on federal student loan consolidation. Consolidation firms look at your FICO score to make decisions about the consolidated loans. Even though this score does not strongly influence consolidation of federal loans, it has a strong influence on the favorable or unfavorable outcome on consolidation of private loans. Generally, a weak credit score does not result in favorable outcome on consolidating private loans. It may even result in increasing the interest rate thus overburdening you with debt rather than providing relief from it.

Debt Consolidation Allows Relief From Debt…. Not Release From the Debt

A number of students assume that student loan consolidation provides them an avenue to completely get rid of their debts. They wrongly believe that it’s a shortcut to release them of the responsibility of paying the loan. The reality is that debt consolidation allows you relief from the debt burden, but not necessarily release from it. The loan amount does not decrease on consolidation, but only the repayment period and/or interest rate is reduced on the loan.

Debt Consolidation Does Not Require Insuring Your Credit

Another important thing to remember about loan consolidation is that you do not have to pay any amount to insure your credit. Many students have reported that their loan consolidation firms pressurize them to obtain insurance for their loans. This is not a requirement for consolidating the loan and rather increases the cost of financing your loans.

Negotiate With Your Lenders on Defaulted Debts

Prior to applying for a loan consolidation you are required to negotiate with your lenders on defaulted loans. This allows you to obtain negotiated terms and agreement of the loan amount that will be paid by the consolidation firm on merging the loans.

Debt consolidation is not an easy matter. It requires proper research and knowledge of finer details regarding the process. It is advisable to consult a professional student loan consolidation adviser to properly guide you in consolidating your loans.

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How to Qualify for Federal Student Loan Consolidation?

Thousands of US students are availing private and federal student loans to finance their studies. Higher education is the stepping-stone of securing a better paying job in the future. Those students that possess a master or bachelor degree have a better chance of being employed in big firms with higher pay prospects.

However, the dilemma is that under the current economic climate getting a lucrative job offer takes time. This means that students who have availed loans to finance their debt will face difficulty in financing their debt upon graduation. Defaulting on the loans will severely hurt their credit score meaning they will have increased difficulty in obtaining loans for such important activities like mortgaging a house, buying a car, and paying off other essential expenses. The perfect answer to these students’ dilemma is consolidating the student loans. Consolidation gives relief to the debt-ridden students by reducing the required monthly repayments and thus avoiding the prospect of default.

How Does the Federal Student Loan Consolidation Process Work?
The student loan consolidation process merges all your private and federal student loans into one single loan. The interest rate on consolidation is normally lower, thus allowing you reprieve from financing the loans.

Consolidating federal student loans is relatively easier than consolidating private student loans.

Federal Student Loan Consolidation
The process and eligibility criteria for federal student loan consolidation are quite different from consolidating private student loans. The interest rate on the consolidated federal loans is calculated using an average interest rate of all the interest rate. If you possess only one federal loan then the interest rate will be determined by the prevalent federal interest rate.

The advantage of consolidating federal loans is that it fixates an interest rate during the duration of the loan. This allows you to know the exact amount you have to pay in terms of the loan and interest rate. It shades you from the prospect of increasing interest rates putting pressure on your finances. Student loan consolidation also extends the repayment period on consolidation, thus reducing the monthly payment amount you have to make in lieu of the student loans.

You should note that not all federal loans are qualified for consolidation. However, the Following federal loans are eligible:
● Federal Nursing Loans
● Direct Loans (Subsidized and Unsubsidized)
● Federal Stafford Loans (Subsidized and Unsubsidized)
● Health Education Assistance Loans
● Perkins Loans
● Supplemental Loans for Students (SLS)
● Direct PLUS Loans
● PLUS loans from the Federal Family Education Loan (FFEL) Program

If you have used the above federal loans, you can easily get relief from the debt through consolidating these loans.
Once you know that your federal loan is eligible for consolidation, you have to contact a student loan consolidation firm in order to consolidate the student loans. First take note of all your accumulated debts, interest rate on debt, loan duration, outstanding loans, and the lenders’ contact details. You have to provide these details to the loan consolidation firm.

The loan consolidation firm will scrutinize your application, verify the details, and then make payments to your existing lenders. You will then have to sign a new contract with the loan consolidation firm detailing the updated interest rate and loan repayment period. Before consolidating your federal student loans, it is essential that you do proper research relating to the consolidation process. You should get expert advice relating to the consolidation process to ensure that you get the most beneficial terms and condition on consolidation.


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