Regaining control of out-of-control finances is never easy. Generally speaking, the sooner that you acknowledge the problem, the likelier you are to avoid the worst consequences. Unfortunately, however, debt problems can spiral out of control with alarming speed. Before you know it, you are scrambling to keep creditors off of your back and even missing monthly payments. Like many people, you might assume that bankruptcy is your only option. Given the consequences that go along with filing bankruptcy, however, it’s worth it to pursue other options. Pennsylvania debt consolidation is among the most useful, but is it right for you?
Why Pennsylvania Debt Consolidation?
In the wake of the Great Recession, average household debt in the U.S. fell for a period of a few years. It’s on the rise again, though, as evidenced by recent statistics. For example, the average amount of credit card debt that is owed by U.S. cardholders is $5,234, and the average interest rate for credit cards that carry interest is a staggering 14.99 percent. Indeed, credit cards and other unsecured loans account for large percentages of many people’s total debt—and these debts are precisely what debt consolidation is designed to address. If you owe debt that primarily consists of credit card debt, personal unsecured loans, collection accounts and past-due medical bills, our Pennsylvania debt consolidation program may be the answer.
How Debt Consolidation Works
The concept behind debt consolidation is easy enough to understand. When multiple types of unsecured debt are owed, a new, lower-interest loan may be taken. This new loan, is then used to pay off the various balances. Everything is then consolidated into a single new loan, and the new loan typically boasts a lower average interest rate. This allows you to chip away at the principal balance faster and to potentially pay off your total debt more quickly. It also reduces the risk of missing or making late payments, so you’re less likely to face late fees and other penalties.
Top Advantages of Pennsylvania Debt Consolidation
Whether you have struggled to make your minimum payments or have fallen behind and are getting harassing phone calls from creditors, your natural instinct is likely to want to eliminate the debt as quickly as possible. Bankruptcy may seem like the way to go, but the reality is that it’s often overkill. Furthermore, due to the Bankruptcy Protection Act of 2005, qualifying for Chapter 7 bankruptcies in particular isn’t easy. Most importantly, bankruptcy leaves a black mark on your credit for seven years whereas debt consolidation can start improving it almost immediately.
Some of the top advantages of debt consolidation include:
Get Rid of Debt Faster
Streamlining several unsecured credit cards and loan payments into a single monthly payment makes it easier to get a firm handle on the situation. Lower interest charges and reduced fees and penalties allow you to pay off debt faster.
Make One Monthly Payment
Make a single monthly payment toward your outstanding debt instead of making minimum payments to several creditors.
Debt consolidation can help you to reduce the overall amount of interest that you are paying by paying off high-interest loans and credit cards with a lower-interest loan. A debt consolidation plan can also put an end to late fees and other penalties that prevent you from making a serious dent in your debt.
Improve Your Credit More Quickly
Some aspects of debt consolidation can negatively impact credit—for example, paying off and closing accounts can knock down your score a bit. However, consistently making your single monthly payment allows you to rebuild a solid credit history more quickly.
End Creditor Harassment
By consolidating various debts into a single debt consolidation plan, you can put an end to harassing phone calls from creditors due to late or missed payments.
Are You a Suitable Candidate for Debt Consolidation?
At this point, debt consolidation is probably sounding pretty good to you. It can indeed be the perfect solution, but it’s not right for everyone. You are more likely to benefit from Pennsylvania debt consolidation if:
- the total amount of debt that you owe is equal to 50 percent or less of your annual income
- your current income or cash flow is enough to cover the majority of your debt payments
- your credit is good enough for you to qualify for lower interest credit cards and loans
- you are willing to educate yourself about managing finances and will take steps to avoid accumulating new debt in the future
Debt consolidation probably isn’t suitable for you if you consistently fall short of making your monthly debt payments. On the other hand, if you could feasibly pay off your total debt within six to 12 months, this option is not very practical. Finally, debt consolidation only works for the long term if you’re willing to change your spending and budgeting habits. If you aren’t, it’s unlikely to make a difference for you.
With that all being said, our company works with independent law firms around the country that offer debt negotiation and debt consolidation programs. If you are looking for Pennsylvania debt consolidation services, Christian Debt Counselors can help.