Debt Debt Management in Texas Is Not What You Think - It Could be Better! Managing overwhelming debt is just a more common problem than many people think. Unfortunately, people coping with large amounts of debt in many cases are unacquainted with most of the options they've or, worse, consider all debt solutions (from debt settlement to debt management to bankruptcy to debt consolidation) as more or less exactly the same thing. They're not. Debt consolidation is a different way of debt than all the methods. Debt consolidation is not right for anyone and not everybody can qualify for it. However for the right people in the best situations, debt consolidation can be undoubtedly the most effective method of escaping from under large amounts of debt ... without hurting your credit! Unlike bankruptcy, you don't need to get a judge involved and file legal paperwork to consolidate debt. Unlike debt management, you may not desire a counselor or agent to act on your own behalf. And unlike most plans of debt relief, debt consolidation done correctly won't hurt your credit score or your financial reputation. Of course, debt consolidation is not for everyone. Financial woes have a means of being unique, and each person or family facing mounting debts has a lot of special factors which come into play. Financial plans designed to help people cope with debt cannot be looked at as one-size-fits-all. Besides that, not everyone (even people who want and need it) can qualify for debt consolidation. Quite simply, debt consolidation is really a way of rolling many debts together, taking out another loan to cover them off, and then managing debt resolution program Texas the consolidated debt. Put simply, you sign up for a huge loan, use it to pay for off all of your bank cards and other debts, and then pay off the big loan. This sounds counter-intuitive. For the individual already saddled with debt, the notion of adding another debt is probably terrifying! And how can adding one more colossal debt to the mixture assist you to?
The answer is not that you're simply getting another loan, it's really a means of re-organizing or restructuring your debts. For example, let's say you've seven credit cards. You're maxed out on three and you borrowed from differing amounts on the other four. Altogether, you borrowed from $82,000
on credit cards. Now let's say that there's $22,000 in car notes and another $4,000 on a revolving plan from a furniture store and the total debt adds around $104,000. That will sound high with a people, but it's really not absolutely all that unusual! Now look at the interest rates on those loans. This may take some detective work, but that information should be available in your monthly statements. If it's not or you can't find it (or figure out what they're talking about), call the toll-free customer service number most such companies have and discuss the loan with them. You want to know the interest rate, that is the percentage of the total loan the business charges you for the privilege of borrowing its money. You will most likely find that interest rates are all over the map. Department store charge cards are traditionally pretty high (22% is not unheard of). Other credit cards span quite a broad range (16% to 20% is rather 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 have debt, you're paying not only the specific amount you borrowed, you're also paying interest. Interest could be the dirty little secret of debt as it keeps accruing, day after day after day. The longer you try pay your loan, the more interest you'll pay. Actually, invest the long enough to cover off a high-interest loan, you can end up paying more in interest compared to the loan itself!! Consider sales tax. Within Texas, where I live, we pay 8.25%. That seems high to me, and nearly all of my fellow Texans will agree. But many interest rates on bank cards is double that-over 16%. Imagine paying double sales tax! That's how interest can definitely add up. Returning to your example, you owe $104,000 at a number of interest rates. What if you have access to a loan for $104,000 at, say, 12%. Would that make sense? You now swap out your many smaller loans for one giant loan at a much lower interest rate. But let's look at the car note. If you're paying 12% or less interest on that, it would not sound right to pay it off and then sign up for a brand new loan at exactly the same or more interest! Can you actually find lower interest rates? A great deal depends on how low you will need to go, how good your credit is, and many other factors. A big plus in debt consolidation is home ownership. If you possess your own personal home, you may be able to obtain a home equity loan or refinance the mortgage in this way that you could extract money from your property to pay off your debts. A mortgage company, banker, or debt consolidation professional can allow you to find out if that works. If you don't own your own home, don't give up. Debt consolidation can still be possible using a type of credit (a form of unsecured loan obtained by way of a bank, credit union, or financial institution). You may even manage to borrow money using another thing of value (a 401(k) account, stock account, property) as collateral. When you have collateral, it's easier to acquire a loan and you'll likely have more clout in getting lower interest rates. That is because collateral means lower risk to the lender. If you put up your retirement account as collateral for a loan, the lender has the best to take funds from your own retirement account to pay for off the loan. It is tough to produce broad statements about debt consolidation, but you are a decent candidate when you have an unpleasant amount of debt and at the very least two of these things is true about you: (a) you possess your own home, even though it's mortgaged, (b) you have a lot of debt at interest rates around 20% or maybe more, (c) you've good credit.