If you have credit card debt and don't want to file for bankruptcy, you have more than one choice. One option is to get a loan to pay off all your debts at once and close all your other credit lines. When you consolidate your debts, you get a new loan that isn't secured and use the money to pay off your other debts. This only moves your debt around, so it's not a very smart choice.
An unsecured debt consolidation loan will help you get rid of all your unsecured debt and keep you from having to file for bankruptcy. If you use this new money to pay off existing debt, especially high-interest credit cards, you could save hundreds of dollars per month. Even if you don't own a home, you might still be able to get a loan from them. Don't forget, though, that you have to pay back this loan.
Debt consolidation loans have a lower interest rate and can be paid back over a longer period of time. This means that the payments are less each month. If your home is used as collateral for the loan, the interest rate and monthly payments may be even lower.
But before you take the plunge, you should weigh the pros and cons of debt consolidation loans. You can either borrow money to pay off all your debts or get help from a programme that helps people consolidate their debts. Which option is best for you depends a lot on how much debt you need to consolidate and whether you qualify for low mortgage rates on debt consolidation loans.
When you get a loan to pay off multiple debts, you stop making those payments right away. All actions to collect debts were stopped. When you use debt consolidation services, your monthly payments go down right away. It also stops some interest and fees and, in some cases, gets rid of them. When you choose a credit counselling programme, all you have to do is make ONE LOW payment every month.
Debt consolidation is a great tool that can help you manage and reduce your debt when you can't seem to do it on your own. You can't completely fix bad credit if you can't pay your bills on time and pay down your debt. But once you have a certain amount of debt, this can seem almost impossible to do.
A credit counsellor can help you sign up for a debt management plan, which will give you immediate relief and let you pay back your debts without the high fees and bad effects of bankruptcy.
But your choice has to be based on how much money you have and how well it fits with your life. The best choice is to get into a debt consolidation programme.
