In 2018, Virginia ranked ninth for the highest median household income at just over $68,000. However, the cost of living is high, and many residents take on large debts. Virginia is also one of the top 10 states for the most credit card debt and student loan debt. Two factors that contribute to Virginia’s debt problem are a lack of state funding for higher education and a lack of resources for protecting personal finances.
The state’s government plans to allocate more money to its universities and colleges, and it hopes to develop more consumer protection laws to help Virginians strengthen their financial health. Virginia debt consolidation loans are sought by many residents who have considerable credit card debt or other debts.
What Is Debt Consolidation?
Debt consolidation is the practice of eliminating debts by financing a partial sum or the total sum of a person’s debts. With credit card debt, some people do this by acquiring a new credit card with a zero-interest introductory rate. They transfer their existing credit card balances to the new card and try to pay off the balance during the promotional period. However, their total credit card debt may be much more than the new card’s limit. In this case, a consolidation loan is a good option. It is meant to pay off the existing debts that have higher interest rates. The borrower then pays on the consolidation loan instead.
Benefits Of Debt Consolidation
The biggest benefit of consolidating credit card debt is having a lower interest rate. Multiple high-interest cards can leave a person paying hundreds of extra dollars every year. Another benefit is the simplicity of only having one payment. There is no need to worry about missing or confusing due dates of multiple credit cards. Debt often leads to stress, which can cause people to lose sleep, feel irritable and even develop health problems. By consolidating credit card debt, Virginians can protect their physical and mental health as well as their financial health.
How A Debt Consolidation Company Helps
First, a debt consolidation counselor discusses a person’s individual debts, finances and concerns. If the person’s credit card interest rates and balances are significant enough that a consolidation loan will help the individual save money, the counselor recommends a loan.
Companies help by offering borrowers loans that they can afford based on their individual circumstances. Interest rates vary based on an individual’s credit. A good consolidation company will not suggest a loan if it won’t help a person save money. If a balance transfer is possible and more beneficial, the company may suggest that. Once the consolidation company collects the necessary information, the loan application is processed. If the applicant is approved, a loan counselor discusses interest rates and loan terms.
Credit counselors also help by giving people valuable advice such as avoiding using credit cards or incurring new debts while paying off a consolidation loan. Although a borrower’s interest rate for a consolidation loan is lower than the sum of the individual interest rates or fees of the credit cards, the rate may be somewhat high if the person does not have excellent credit. When a person uses credit cards while repaying a consolidation loan, the individual may wind up defaulting and hurting his or her credit.
Debt Consolidation Versus Debt Management
A consolidation loan offers a quicker solution than debt management, which involves negotiating lower interest rates or reduced payments with individual creditors. If a person’s credit card debts are tied to high interest rates and large balances on each card, a loan may be a more sensible choice. Consolidation experts can answer any questions and can address common misconceptions about consolidation loans.
Who Can Offer Debt Consolidation Loans In Virginia?
Virginia debt consolidation loans may be offered by companies that are licensed according to the rules in Title 6.2, Chapter 20 of the Code of Virginia. To gain a license, a company must demonstrate good character, adequate experience, fair business practices and financial responsibility. The Commission is in charge of granting licenses and verifies that each applying company meets these requirements. After a business gains a license, it can offer debt management plans according to the Commission’s definition. Section 6.2-2000 defines a debt management plan, which is a program that is offered by an agency to pool or distribute a consumer’s debt on behalf of that individual.
Reputable companies are accredited by the Council on Accreditation, the International Standards Organization or by another organization that the Commission approves. Credit counselors must also be certified properly. To demonstrate that they take financial responsibility seriously, debt consolidation companies must acquire a surety bond between $25,000 and $350,000. The Commission decides the amount based on volume of business and other factors.
Is A Virginia Debt Consolidation Loan Right For You?
If you feel like you are struggling to pay off your credit cards and are only paying the monthly interest that accrues, it could take many years to pay off your debts without intervention. A debt consolidation loan may be right for you if you have multiple cards and a considerable amount of total debt in relation to your income. The best way to determine if this is the right solution for you is to talk to a licensed counselor who can analyze your situation. Contact Christian Debt Counselors or apply online today for a free consultation.