Debt Consolidation

Debt Consolidation: Understanding Your Options

In today's economy, the feeling of drowning in debt is all too common. There are so many bills pouring in that it's hard to keep track of them all, much less prioritize those that must be paid from those that you can let slide for awhile longer. Many of those who live in Putnam Valley NY and elsewhere dream of whittling down that stack of bills and getting their heads above waters. Thanks to debt consolidation, that dream can become a reality.

In practice, debt consolidation means taking out a single loan to pay off the rest of your bills. The result is that you can more or less get a fresh start. It doesn't mean that your old bills will go away, but by paying them off via debt consolidation, it does mean that you'll have only a single bill to pay.

There are various options for debt consolidation loans, and you should think carefully about the path you choose. For example, credit card balances are considered unsecured loans, because you have not offered anything you own as collateral. In contrast, a car loan or a mortgage is considered a secured loan, because you are using your car and your home, respectively, as collateral. In these instances, if you don't repay your loans the lender can repossess your car or foreclose upon your home.

With regards to a debt consolidation loan, an important consideration is whether to take out an unsecured loan or a secured loan. If you're primarily paying off credit card debt, an unsecured loan is typically the best way to go. After all, you don't want to subject your car to repossession or your home in Putnam Valley NY to foreclosure in order to pay that large medical bill. Keep in mind that in [statetitle], credit card debt and medical debt are dischargeable in bankruptcy, and that you'll typically be able to keep your home and car should you go through bankruptcy proceedings. So, if you believe that you may eventually end up in bankruptcy, don't add to your mortgage or car loan debt in order to pay off credit card debt.

On the other hand, if you are seeking debt consolidation for bills related to things like home improvement expenses, it may make sense to seek out a secured loan for debt consolidation, such as a home equity loan or line of credit. Secured loans typically have fixed interest rates and lower interest rates than unsecured loans, so your monthly payments will be lower and you'll pay less overall for borrowing the same amount of money.

Know that, if you're feeling hopeless about that pile of bills, there are debt consolidation options that can help you get through this difficult time. Just make sure to carefully consider your options and take the debt consolidation path that's right for you.