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 most people think. Unfortunately, people coping with large amounts of debt tend to be unaware of 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 the same thing. They're not. Debt consolidation is a different method of debt than all the methods. Debt consolidation is not right for anyone and not anyone can qualify for it. However for the right people in the best situations, debt consolidation can be undoubtedly the very best way of escaping from under large amounts of debt ... without hurting your credit! Unlike bankruptcy, you may not want to get a judge involved and file legal paperwork to consolidate debt. Unlike debt management, you do not desire a counselor or agent to do something 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 is not for everyone. Financial woes have a way of being unique, and each person or family facing mounting debts has lots of special factors that can come into play. Financial plans designed to simply help people cope with debt cannot be considered as one-size-fitsall. Besides that, not everybody (even people who want and need it) can qualify for debt consolidation. Basically, debt Get out of Debt Texas consolidation is really a method of rolling many debts together, taking out another loan to cover them off, and then managing the consolidated debt. Put simply, you take out a big loan, utilize it to pay for off all of your credit 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 how do adding an additional colossal debt to the mixture help you? The answer is not that you will be simply getting another loan, this really is a means of re-organizing or re-structuring your debts. For example, let's say you have seven credit cards. You're maxed on 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 the furniture store and the full total debt adds around $104,000. Which could sound high to some 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 on your own monthly statements. When it is not or you can't think it is (or determine 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 will be the percentage of the total loan the company charges you for the privilege of borrowing its money. You will most likely learn that interest rates are all over the map. Department store charge cards are traditionally pretty high (22% isn't 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 car 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 could be the dirty little secret of debt because it keeps accruing, day after day after day. The longer you decide to try pay your loan, the more interest you'll pay. Actually, for long enough to pay for off a high-interest loan, you can wind up paying more in interest than the loan itself!! Consider sales tax. Within Texas, where I live, we pay 8.25%. That seems high to me, and most of my fellow Texans will agree. But many interest rates on charge cards is double that-over 16%. Imagine paying double sales tax! That's how interest really can add up. Returning to the example, you owe $104,000 at many different interest rates. Imagine if you could get a loan for $104,000 at, say, 12%. Would that produce sense? At this point you 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 make sense to pay for it off and then sign up for a new loan at the same or more interest! Can you really find lower interest rates? A great deal depends on how low you will need to go, how good your credit is, and a number of other factors. A big plus in debt consolidation is home ownership. If you possess your own home, perhaps you are able to obtain a home equity loan or refinance the mortgage in this way that you could extract money from your home to pay off your debts. A mortgage company, banker, or debt consolidation professional can assist you to figure out if that works. 491&ssl=1" width="280" /> If you do not own your own home, do not give up. Debt consolidation may still be possible using a line of credit (a kind of unsecured loan obtained via a bank, credit union, or financial institution). You may even have the ability to borrow money using another thing of value (a 401(k) account, stock account, property) as collateral. If you have collateral, it's easier to obtain 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 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's tough to make broad statements about debt consolidation, but you're a very good candidate when you yourself have an uncomfortable amount of debt and at least two of these things is true about you: (a) you possess your personal home, even when it's mortgaged, (b) you've plenty of debt at interest rates around 20% or older, (c) you have good credit.