Debt Debt Management in Texas Is Not What You Think - It Might be Better!
Managing overwhelming debt is just a more common problem than most people think. Unfortunately, people coping with large amounts of debt tend to be unaware of all the options they have or, worse, think of all debt solutions (from debt settlement to debt management to bankruptcy to debt consolidation) as more or less the same thing. They're not. Debt consolidation is a totally different way of debt than all other methods. Debt consolidation is not right for everybody and not everyone can qualify for it. However for the proper people in the best situations, debt consolidation can be undoubtedly the most effective approach to getting out from under large levels 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 do not need a counselor or agent to behave on your own behalf. And unlike most plans of debt relief, debt consolidation done right will not hurt your credit score or your financial reputation. Of course, debt consolidation isn't for everyone. Financial woes have a way of being unique, and every single person or family facing mounting debts has lots of special factors which come into play. Financial plans designed to greatly help people cope with debt cannot be considered as one-size-fitsall. Besides that, not everyone (even those that want and need it) can qualify for debt consolidation. Basically, debt consolidation is really a way of rolling many debts together, taking out another loan to cover them off, and then managing the consolidated debt. Put simply, you remove a big loan, use it to pay off your entire charge cards and other debts, and then pay off the big loan. This sounds counter-intuitive. For anyone already saddled with debt, the thought of adding another debt might be terrifying! And how do adding yet another colossal debt to the mixture assist you to? The solution is not that you're simply getting another loan, this really is a means of re-organizing or re-structuring your debts. Like, let's say you have seven credit cards. You're maxed on three and you owe differing amounts on the other four. Altogether, you owe $82,000 on credit cards. Now let's say that there surely is $22,000 in car notes and another $4,000 on a revolving plan from a furniture store and the full total debt adds around $104,000. That'll sound high for some people, but it's really not absolutely all that unusual!
Now look at the interest rates on those loans. This will take some detective work, but that information should be available in your monthly statements. When it is not or you can't believe it is (or figure out what they're talking about), call the toll-free customer care number most such companies have and discuss the loan with them. You intend to know the interest rate, which is the percentage of the sum total loan the company charges you for the privilege of borrowing its money. You will likely find that interest rates are throughout the map. Department store bank cards are traditionally pretty high (22% is not unheard of). Other bank cards span a pretty broad range (16% to 20% is rather normal). An in-store loan for furniture is probable high (22% is typical) but the car note could be half that (10% to 12%...again, these vary widely). When you yourself have debt, you're paying not only the particular 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, invest the long enough to pay off a high-interest loan, you can wind up paying more in interest than the loan itself!! Think of sales tax. Here in Texas, where I live, we pay 8.25%. That seems high if you ask me, and nearly all of my fellow Texans will agree. But most interest rates on credit cards is double that-over 16%. Imagine paying double sales tax! That's how interest really can add up. Finding its way back to your example, your debt $104,000 at a variety of interest rates. Imagine if you have access to a loan for $104,000 at, say, 12%. Would that produce sense? At this point you swap out your many smaller loans for starters giant loan at a reduced interest rate. But let's look at the Texas debt relief car note. If you're paying 12% or less interest on that, it would not make sense to pay for it off and then take out a fresh loan at the exact same or higher interest! Can you really find lower interest rates? A lot depends how low you will need to go, how good your credit is, and a number of other factors. A large plus in debt consolidation is home ownership. If you own your personal home, perhaps you are able to acquire a home equity loan or refinance the mortgage in this way as you are able to extract money from your house to cover off your debts. A mortgage company, banker, or debt consolidation professional can assist you to find out if that works. If you do not own your own home, do not give up. Debt consolidation can still be possible using a type of credit (a type of unsecured loan obtained via a bank, credit union, or financial institution). You may even have the ability 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 acquire a loan and you'll likely do 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 retirement account to pay for off the loan. It is tough to produce broad statements about debt consolidation, but you are a decent candidate if you have an unpleasant level of debt and at the least two of these exact things does work about you: (a) you have your own home, even though it's mortgaged, (b) you've a lot of debt at interest rates around 20% or higher, (c) you've good credit.