Getting behind on your debts is something that you never plan but it just happens. One month you are a little short so you skip a bill payment assuming you will catch it up next month. However, next month you are still short on funds to pay your bills so you skip another payment. Before long, you are receiving past due notices in the mail and threatening telephone calls at home and at work. No matter how hard you try to catch up, you just get further behind. Then you see a commercial for a loan consolidation and wonder if that is the answer to your debt problems.
Using a Loan Consolidation to Get Out of Debt
Companies who offer loan consolidation make it very enticing to people who are struggling to pay their bills. One low payment each month solves your problems with debt. No more credit card bills, medical debts, personal loans, or other unsecured debts to worry about each month. Just that one low payment. You save money and interest. Sound great? Loan consolidation companies want you to think so.
While this does sound very attractive, a loan consolidation is not always the best way to solve your debt problems. Borrowing money for a loan consolidation is simply trading one debt for another debt. You are combining all of your unsecured debts into one monthly payment; however, you are not eliminating or reducing your debt. You are simply tying your debt up under one big bow.
When is a Loan Consolidation a Good Idea?
Before deciding to apply for a loan consolidation, you need to consult with an experienced bankruptcy attorney to discuss all of your options. For a few people, loan consolidation may work. For example, if you can obtain an unsecured loan at a very low interest rate with a low monthly payment you can afford, loan consolidation may work for you. However, this is the exception rather than the norm.
Most of the time with loan consolidation, the person is required to put up collateral for the loan. In other words, you are turning unsecured debts into a secured debt and placing your home or other assets at risk if you default on the loan. If you are struggling to pay your debts, you likely have an income issue that getting another loan will not resolve. Whether you have 1 payment or 10 payments each month, if you do not have sufficient income to pay your debts, the number of payments does not matter.
Loan consolidation does not resolve debt problems — it simply reorganizes the debt problem. Filing bankruptcy eliminates debts and gives you a fresh start to rebuild your finances for a better future. Before making any decisions about your financial problems, consult with my office to discuss how filing bankruptcy may be your best solution for debt relief.
Contact an Experienced Mount Holly Bankruptcy Attorney
Personal Approach, Professional Service, Affordable
The Law Office of Travis J. Richards, LLC is a full-service Mount Holly bankruptcy law firm. Our practice is focused on helping clients find affordable solutions to their debt problems using bankruptcy and non-bankruptcy alternatives.
We represent clients in Burlington County and throughout South Jersey. Contact our office at 609-267-5297 or use our online contact form to schedule a free consultation. You do not need to suffer with overwhelming debt – we will help you find the right solution for you.
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