Debt Debt Management in Texas Is Not What You Think - It Could possibly be Better! Managing overwhelming debt is really a more common problem than many people think. Unfortunately, people coping with large levels of debt are often unacquainted with all of the options they have or, worse, consider all debt solutions (from debt settlement to debt management to bankruptcy to debt consolidation) as pretty much the same thing. They're not. Debt consolidation is a different way of debt than all the methods. Debt consolidation is not right for everybody and not anyone can qualify for it. However for the best people in the best situations, debt consolidation could be definitely the very best approach to escaping from under large levels of debt ... without hurting your credit! Unlike bankruptcy, you may not have to get a judge involved and file legal paperwork to consolidate debt. Unlike debt management, you may not desire a counselor or agent to do something on your own behalf. And unlike most plans of debt relief, debt consolidation done right won't hurt your credit score or your financial reputation. Of course, debt consolidation is not for everyone. Financial woes have a method of being unique, and every single person or family facing mounting debts has a lot of special factors that come into play. Financial plans designed to help people cope with debt can never be considered as one-size-fits-all. Besides that, not everyone (even those who want and need it) can qualify for debt consolidation. Basically, debt consolidation is just a way of rolling many debts together, taking out another loan to pay them off, and then managing the consolidated debt. In other words, you remove a large loan, use it to pay off all of your bank cards and other debts, and then pay off the big loan. This sounds counter-intuitive. For anyone already saddled with debt, the very thought of adding another debt might be terrifying! And just how can adding an additional colossal debt to the mixture help you? The answer isn't that you are simply getting another loan, it is a method of re-organizing or restructuring your debts. As an example, let's say you've seven credit cards. You're maxed from three and you borrowed from differing amounts on the other four. Altogether, you owe $82,000 on credit cards. Now let's say that there is $22,000 in car notes and another $4,000 on a revolving plan from a furniture store and the total debt adds as much as $104,000. That will sound high to some people, but it's really not all that unusual! Now go through the interest rates on those loans. This could take some detective work, but that information should be available on your own monthly statements. If it's not or you can't believe it is (or determine what they're talking about), call the toll-free customer service number most such companies have and discuss the loan with them. You wish to know the interest rate, which will be the percentage of the total loan the business charges you for the privilege of borrowing its money. You will probably learn that interest rates are throughout the map. Department store charge cards are traditionally pretty high (22% is not unheard of). Other charge cards span quite a broad range (16% to 20% is fairly normal). An in-store loan for furniture is likely high (22% is typical) but the vehicle note might be half that (10% to 12%...again, these vary widely).
When you yourself have debt, you're paying not just the specific amount you borrowed, you're also paying interest. Interest could be the dirty little secret of debt since it keeps accruing, day after day after day. The longer you try pay your loan, the more interest you'll pay. In reality, for good enough to pay off a high-interest loan, you can find yourself paying more in interest compared to the loan itself!!
Consider sales tax. Within Texas, where I live, we pay 8.25%. That seems high in my experience, and nearly all of my fellow Texans will agree. But many interest rates on credit cards is double that-over 16%. Imagine paying double sales tax! That's how interest can actually add up. Returning to our example, your debt $104,000 at many different interest rates. Imagine if you could get a loan for $104,000 at, say, 12%. Would that produce sense? You now swap out your many smaller loans for just one giant loan at a lower interest rate. But let's consider the car note. If you're paying 12% or less interest on that, it wouldn't make sense to pay for it off and then remove a fresh loan at the same or more interest! Can you actually find lower interest rates? A whole lot depends how low you'll need to go, how good your credit is, and many other factors. A big plus in debt consolidation Debt Management Texas is home ownership. If you own your own personal home, you may well be able to acquire a home equity loan or refinance the mortgage in this way that you can extract money from your property to pay off your debts. A mortgage company, banker, or debt consolidation professional can help you determine if that works. If you may not own your own home, do not give up. Debt consolidation can always be possible using a type of credit (a type of unsecured loan obtained via a bank, credit union, or financial institution). It's also possible to manage to borrow money using something different of value (a 401(k) account, stock account, property) as collateral. Any time you have collateral, it's easier to get a loan and you'll likely have significantly more clout in getting lower interest rates. That is because collateral means lower risk to the lender. If you place up your retirement account as collateral for a loan, the lender has the proper to take funds from your retirement account to cover off the loan. It is tough to create broad statements about debt consolidation, but you are a very good candidate when you yourself have an uncomfortable quantity of debt and at least two of these things is true about you: (a) you own your personal home, even though it's mortgaged, (b) you've lots of debt at interest rates around 20% or higher, (c) you have good credit.