Did you know that there is a whole category of people today called “debt slaves?” These are folks who have gotten so deeply in debt that it may take them years to work their way out or they might not ever get out. If you’re carrying $10,000, $15,000 or more in credit card debt, and are having a problem just making your minimum monthly payments, you may be one of those slaves.
How to break the shackles of big debt
One way to get your debts under control is with a credit consolidation loan. It’s a fairly fast and relatively easy solution. But before you run out to your bank to fill out a loan application, there are some things you should consider.
The good of a credit or debt consolidation loan is that it will immediately get rid of your debts so that you’ll eliminate those nasty calls you’ve been getting from the credit card companies or from debt collectors. You will no longer need to make multiple payments each month because you’ll be making just one payment to the lender from which you got the consolidation loan. Your monthly payment should be lower than the sum of the monthly payments you’ve been making and your loan should come with a lower interest rate.
The bad news of a credit or debt consolidation loan is that if you’re heavily in debt you probably won’t be able to get an unsecured loan. You will have to get a secured loan instead, which will probably mean putting up your house as collateral in the form of a second mortgage or homeowner’s equity line of credit (or HELOC). This is bad because it puts your house at risk for foreclosure if you were to ever default on the loan.
The ugly part of a credit consolidation loan is how long it will take you to pay it back. If you would be forced to get a second mortgage or HELOC, it would probably take you anywhere from 5 to 10 years to pay it back. That’s a long-term commitment and a period of time during which you shouldn’t run up any new revolving debt or you could end up right back in the soup.
Credit counseling as an alternative
One alternative to a debt consolidation loan that many families choose is called consumer credit counseling. You may be able to find a non-profit agency in your town that does credit counseling. If not, there are a host of these available via the Internet. Whether you go to an agency in person or choose one that’s online, they work about the same. A counselor will review your finances in depth and help you create a debt management plan to pay back what you owe. Your counselor will present this plan to your creditors. If they all approve it, you will no longer have to pay them. Instead, you’ll send one check a month to the credit-counseling agency, which will then pay your creditors.
Unfortunately, there are also some bad things about this alternative. For one thing, you will have to shred all your credit cards and not take on any new debt until you complete your plan. Second, it will probably take you five years to complete it. And it could leave a negative mark on your credit record.
A better alternative
A second alternative to debt consolidation is called debt settlement. And this is what we do. Our debt counselors will negotiate with your creditors to reduce your interest rates and balances to help you get out of debt much faster than with either a debt consolidation loan or credit counseling. They usually save our clients thousands of dollars in the process. You can get complete details on debt settlement by calling our toll-free number or by filling out the form you will find on this page. Contact us today so that we can explain how debt settlement might help you.