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Managing overwhelming debt is a more common problem than many people think. Unfortunately, people coping with large levels of debt in many cases are unacquainted with every one 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 exact same thing. They're not. Debt consolidation is a completely different way of debt than all other methods. Debt consolidation isn't right for everybody and not anyone can qualify for it. However for the best people in the best situations, debt consolidation may be undoubtedly the most effective method of escaping from under large amounts of debt ... without hurting your credit!
Unlike bankruptcy, you may not have 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 in your behalf. And unlike most plans of debt relief, debt consolidation done correctly won't hurt your credit score or your financial reputation. Obviously, debt consolidation isn't for everyone. Financial woes have a method 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 can never be viewed as one-size-fits-all. Besides that, not everybody (even those who want and need it) can qualify for debt consolidation. Quite simply, debt consolidation is just a way of rolling many debts together, taking out another loan to cover them off, and then managing the consolidated debt. In other words, you remove a large loan, put it to use to pay for off all 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 notion of adding another debt is probably terrifying! And how can adding one more colossal debt to the mixture assist you to? The solution is not that you're simply getting another loan, it is a way of re-organizing or re-structuring your debts. Like, let's say you have seven credit cards. You're maxed on three and your debt differing amounts on another four. Altogether, your debt $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 full total debt adds up to $104,000. Which could sound high for some people, but it is really not absolutely all that unusual! Now look at the interest rates on those loans. This could take some detective work, but that information should be accessible in your monthly statements. If it is not or you can't believe it is (or figure 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 will be the percentage of the full total loan the business charges you for the privilege of borrowing its money. You will probably discover 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 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 may be half that (10% to 12%...again, these vary widely). When you yourself have debt, you're paying not just the specific 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 decide to try pay your loan, the more interest you'll pay. In reality, if you take long enough to pay off a high-interest loan, you are able to 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 most interest rates on bank cards is double that-over 16%. Imagine paying double sales tax! That's how interest really can add up. Returning to our example, you owe $104,000 at many different interest rates. What if you could get a loan for $104,000 at, say, 12%. Would which make sense? At this point you swap out your many smaller loans for just one giant loan at a lower interest rate. But let's look at the car note. If you're paying 12% or less interest on that, it would Debt Help Texas not make sense to cover it off and then take out a new loan at exactly the same or older interest!
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September 2019
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