If you find yourself overwhelmed with debt and struggling to keep up with a multitude of debt payments, you might be thinking about consulting your debt. However, before you make a decision, it is important to know the pros and cons of debt consolidation.
Read more to learn if debt consolidation is the right move for you to achieve debt relief.
Debt Consolidation: Good Idea or Bad Idea?
Debt consolidation is the process of grouping debt payments into a single payment. Individuals take out a large loan to pay off single debt – such as credit card debt, utility bills, personal loans, and more.
Studies show that 38 percent of people with credit card debt have taken a loan for debt consolidation. Although this is a financial strategy that many Americans take, it is important to know that debt consolidation is not a solution to overwhelming debt. You will still need to pay off the debt you owe one way or another – it only helps make payments a bit easier by grouping them into one payment plan.
When Debt Consolidation Is a Bad Idea
Although debt consolidation isn’t always bad, you might have an issue paying it off. Even if the interest rates in the consolidation loan are lower than your other payments, you will likely have to pay a higher amount in the debt consolidation loan. Therefore it is important to do your due diligence before consolidating your debt since it could end up costing you more in the long run.
Other Debt Relief Options
Although debt consolidation might seem like the only suitable option, there are many avenues available for you to achieve financial stability. Debt consolidation can make payments more manageable, but other options can help make your finances manageable while helping you get rid of your debt, such as bankruptcy, debt settlement, creditor negotiations, and more.
Contact our New York debt relief attorneys today at (516) 217-4488 to learn more about your options!