If you have a serious amount of debt, say $19,000 or more, take heart. You’re not all alone. In fact, it has been estimated that the average US household has $19,000 in non-mortgage debt. If you could pay off that $19,000 at the rate of $300 a month (including interest), it would take you about 63 months to pay it off. Plus, you couldn’t charge up anything else or that 63 months could swell to 70 or more. When you think about this, it’s no wonder that so many Americans have a problem making repayments and need the best debt consolidation programs.
Debt consolidation means new debt
The way debt consolidation programs work is based on debt consolidation loans. In other words, to take out a loan, usually secured by some asset such as your house, and use it to pay off all your credit card and any other debt you’ve accumulated.
The advantages of a debt consolidation loan are, first, you will have a lower interest rate and it will be a fixed rate. While the interest you pay on your credit cards can change from one year to the next, the interest on a debt consolidation loan always remains the same.
A second advantage of debt consolidation loans is that once you pay off all those creditors who have been hounding you, they’re now out of your life. You can relax when the phone rings knowing it’s not a debt collector calling to harass you.
However, there are disadvantages to these programs that involve consolidation loan. If you use your house as collateral for the loan and you don’t make your payments, you could lose it. Second, a consolidation loan generally extends the length of your debt. In other words, instead of paying it off in five years (or less), it could take you seven or even 10 years. This is one way loan consolidators promise a lower monthly payment, by extending your loan repayment term.
A bigger danger
There’s another and even bigger danger of debt consolidation loans and that’s what happens after you get one. You will need to do a much better job of handling your finances than before or you could find yourself back running up new credit card debt – and end up in even worse shape. You will need to create a budget and stick to it and buy only things you can afford. And if you do use a credit card (or several), you will need to make sure that whatever you charge can be paid off when your statement arrives.
Debt consolidation or debt relief?
While debt consolidation can help you manage your debt by reducing your monthly payments, it can’t reduce your debt. If you borrowed $19,000 to pay off $19,000 in debt, you still owe $19,000. You’ve just swapped one kind of debt for another kind. In fact, if you work the numbers, you might discover that your debt consolidation loan will end up costing you more than your credit card payments.
Another solution that many Americans have turned to is called debt settlement or debt negotiation. The advantages of a debt settlement program are that it can get your debt reduced, lower your monthly payments and have you out of debt in four years or less.
There are numerous companies on the Internet advertising that they can provide you credit card debt relief. However, it pays to remember caveat emptor or let the buyer beware. You need to do your homework and make sure you choose a reliable debt relief company with a history of satisfied customers, as there are some scam artists in this business. One way you can recognize one of these tricksters is if it asks for a lot of money upfront. You could pay it a lot of money only to see it disappear on you.
In comparison, a legitimate debt relief company such as National Debt Relief (ww6.wpengine.com) will charge nothing upfront and take its fee out of the money it saves you. In other words, the debt relief program costs you nothing unless it can successfully negotiate a reasonable debt settlement for you. And that sounds like a pretty good deal. That’s a better deal than most debt consolidation programs.
If that sounds good to you, give us a call so we can talk about your debt woes. Or you can fill out the form at the right side of this page and we will have someone get in touch with you. The time to act on your debt problems is needed and we are here to assist you.