Debt Debt Management in Texas Is Not What You Think - It Could possibly be Better! Managing overwhelming debt is just a more common problem than a lot of people think. Unfortunately, people coping with large levels of debt in many cases are 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 exactly the same thing. They're not. Debt consolidation is a totally different method of debt than other methods. Debt consolidation isn't right for everybody and not anyone can qualify for it. But for the best people in the right situations, debt consolidation can be by far the very best method of escaping from under large amounts of debt ... without hurting your credit! Unlike bankruptcy, you don't have 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 behalf. And unlike most plans of debt relief, debt consolidation done right will not hurt your credit score or your financial reputation.
Needless to say, debt consolidation is not for everyone. Financial woes have a means 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 cannot be considered as onesize-fits-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 remove a big loan, put it to use to pay off all of your charge cards and other debts, and then pay off the big loan. This sounds counter-intuitive. For the individual already saddled with debt, the idea of adding another debt might be terrifying! And just how can adding an additional colossal debt to the mixture help you? The solution isn't that you're simply getting another loan, it is a way of re-organizing or restructuring your debts. For instance, let's say you've seven credit cards. You're maxed out on three and your debt differing amounts on one 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 the furniture store and the sum total debt adds as much as $104,000. Which could sound high for some people, but it is really not totally all that unusual!
Now consider the Credit Card Consolidation Texas interest rates on those loans. This could 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 find out what they're talking about), call the toll-free customer support 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 organization charges you for the privilege of borrowing its money. You will probably discover that interest rates are all over the map. Department store bank cards are traditionally pretty high (22% is not unheard of). Other charge 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 car note may be half that (10% to 12%...again, these vary widely). When you have debt, you're paying not just the actual amount you borrowed, you're also paying interest. Interest may be the dirty little secret of debt because 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 end up paying more in interest compared to the loan itself!! Think of sales tax. Here in Texas, where I live, we pay 8.25%. That seems high to me, and nearly all 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 can actually add up. Returning to the example, you borrowed from $104,000 at a number of interest rates. What 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 one giant loan at a reduced interest rate. But let's go through the car note. If you're paying 12% or less interest on that, it would not sound right to pay it off and then remove a fresh loan at exactly the same or maybe more interest! Can you really find lower interest rates? A great deal depends on what low you will need to go, how good your credit is, and many other factors. A large plus in debt consolidation is home ownership. If you have your own home, you may well be able to obtain a home equity loan or refinance the mortgage in such a way that you can extract money from your house to cover off your debts. A mortgage company, banker, or debt consolidation professional can allow you to figure out if that works. If you don't own your own home, do not give up. Debt consolidation can always be possible using a line of credit (a kind 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 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 do have more clout in getting lower interest rates. That's 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 retirement account to pay for off the loan. It's tough to make broad statements about debt consolidation, but you are a decent candidate if you have an uneasy quantity of debt and at the least two of these exact things does work about you: (a) you possess your own personal home, even though it's mortgaged, (b) you have plenty of debt at interest rates around 20% or higher, (c) you have good credit.