Debt Debt Management in Texas Is Not What You Think - It Could be Better! Managing overwhelming debt is really a more common problem than most people think. Unfortunately, people coping with large levels of debt tend to be unaware of 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 exact same thing. They're not. Debt consolidation is a totally different way of debt than other 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 can be undoubtedly the most effective way of escaping from under large levels of debt ... without hurting your credit! Unlike bankruptcy, you do not need to get a judge involved and file legal paperwork to consolidate debt. Unlike debt management, you do not desire a counselor or agent to behave on your behalf. And unlike most plans of debt relief, debt consolidation done right won't hurt your credit score or your financial reputation. Needless to say, debt consolidation isn't for everyone. Financial woes have a way of being unique, and each person or family facing mounting debts has plenty of special factors that can come into play. Financial plans designed to greatly help people cope with debt cannot be looked at as one-sizefits-all. Besides that, not everybody (even people who want and need it) can qualify for debt consolidation. Simply, debt consolidation is a way of rolling many debts together, taking out another loan to pay them off, and then managing the consolidated debt. Quite simply, you sign up for a large loan, put it to use 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 just how can adding yet another colossal debt to the mixture allow you to? The clear answer is not that you're simply getting another loan, it's really a means of re-organizing or re-structuring your debts. For instance, let's say you have seven credit cards. You're maxed on three and you owe differing amounts on one other four. Altogether, you owe $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 the furniture store and the sum total debt adds around $104,000. Which could sound high for some people, but it is really not all that unusual! Now consider the interest rates on those loans. This may take some detective work, but that information should be available on your own monthly statements. When it is 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 intend to know the interest rate, which will be the percentage of the sum total loan the organization charges you for the privilege of borrowing its money. You will debt settlement Texas most likely learn that interest rates are throughout the map. Department store bank cards are traditionally pretty high (22% is not unheard of). Other credit cards span a fairly broad range (16% to 20% is pretty normal). An in-store loan for furniture is likely
high (22% is typical) but the automobile note might be half that (10% to 12%...again, these vary widely). When you yourself have debt, you are paying not merely the actual amount you borrowed, you're also paying interest. Interest is the dirty little secret of debt as it keeps accruing, day after day after day. The longer you take to pay your loan, the more interest you'll pay. In fact, if you take good enough to pay off a high-interest loan, you can find yourself paying more in interest than the loan itself!!
Think of sales tax. Within Texas, where I live, we pay 8.25%. That seems high if you ask me, and most of my fellow Texans will agree. But most interest rates on charge cards is double that-over 16%. Imagine paying double sales tax! That's how interest really can add up. Finding its way back to our example, you owe $104,000 at a variety of interest rates. What if you could get a loan for $104,000 at, say, 12%. Would that make sense? At this point you swap out your many smaller loans for one giant loan at a reduced interest rate. But let's consider the car note. If you're paying 12% or less interest on that, it would not make sense to pay for it off and then remove a fresh loan at the exact same or maybe more interest! Can you actually find lower interest rates? A great deal depends on how low you need to go, how good your credit is, and a great many other factors. A big plus in debt consolidation is home ownership. If you possess your personal home, maybe you are able to acquire a home equity loan or refinance the mortgage in such a way as you are able to extract money from your house to pay off your debts. A mortgage company, banker, or debt consolidation professional can assist you to find out if that works. If you don't own your own personal home, do not give up. Debt consolidation can always be possible using a distinct credit (a type of unsecured loan obtained by way of a bank, credit union, or financial institution). You may also have the ability to borrow money using something else of value (a 401(k) account, stock account, property) as collateral. If you have collateral, it's easier to get 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 add up your retirement account as collateral for a loan, the lender has the right to take funds from your own retirement account to cover off the loan. It is tough to create broad statements about debt consolidation, but you are a decent candidate when you have a miserable number of debt and at the very least two of these things holds true about you: (a) you possess your own personal home, even if it's mortgaged, (b) you have lots of debt at interest rates around 20% or more, (c) you've good credit.