Chances are, if you are reading this article, you have some serious debt accumulating. It's usually extremely daunting when the bills keep piling up, and you might not know where to turn to for help. You might have heard a bit about debt consolidation but aren't too sure on how it will help you climb your way out of the hole you're in.

Read below to learn about different ways you can utilize debt consolidation in North Carolina.

North Carolina Debt Consolidation Loans

One of the more common types of debt consolidation is a consolidation loan, which enables you to merge all your debts under one single payment. There's a couple of various kinds of debt consolidation loans you can use.

Secured Debt Consolidation Loans in North Carolina

Typically a secured debt consolidation loan will help you lump most of your debt payments under a single bill at a lower rate than the individual rates you've probably been getting. However, in order to secure a lower rate with a secured debt consolidation loan, you must have some type of asset to use as collateral, such as your home. More information on that can be found below.

How much of a loan you can get depends on the type of collateral you're using and how much it's worth. These types of loans can be repaid back over a long period of time, anywhere from 5 to 30 years, and they can often improve your credit score if managed properly. If not, you risk defaulting on the loan and losing the asset used as collateral.

Unsecured Debt Consolidation Loans in North Carolina

Much like a secured debt consolidation loan, an unsecured debt consolidation loan gives you the ability to combine your debt payments under one lump sum with one interest rate. However, unlike a secured debt consolidation loan, you're not required to have an asset or collateral to receive such a loan.

Because you aren't offering up any collateral for such a loan, it's a much riskier loan for debt consolidators, and your rate of interest could be somewhat high. These loans are determined based on your credit history and score, and the benefit of an unsecured debt consolidation loan is that you aren't in jeopardy of losing your asset should you default.

Using a Home Equity Loan as Debt Consolidation in NC

A home equity loan allows you to borrow money, using your home as collateral. This home equity loan is essentially a second mortgage that lets you turn the equity on your home (the money your home is worth minus the amount you owe on it) into cash for you to use at your discretion, such as debt consolidation. These loans are set up to be repaid faster than your mortgage in equal payments with a fixed rate of interest.

Home equity loans are secured loans which have the same risks and rewards mentioned above.

North Carolina Credit Card Debt Consolidation Options

There are also programs that allow you to consolidate all of your credit card debt into one single payment (and interest rate). If you've got good credit, you might be able to negotiate a lower interest rate on your credit cards, making it easier to repay.

Another option is to receive a new credit card at a low introductory interest rate (possibly as low as 0%) and transfer your credit card balance to your new card. While you're in your interest free rate, you can make double payments in order to pay off your debt faster. But keep in mind that the interest may very well be fairly high after the promotional period. You should consider this way of consolidating debt only if you know you can pay off the debt while the introductory rate is in effect.

Enrolling in a Debt Management Program in North Carolina

Another option when it comes to debt consolidation is to enroll in a debt management program. A credit counseling agency can help you set up a debt management plan to help you pay off your debt as quickly as possible. This agency will also usually negotiate with your debtors in an effort to reduce interest  rates and fees.

Once the repayments have been negotiated you will usually create an account with the credit counseling agency and pay one lump sum a month into the account. The credit counseling agency will then disburse the payments out to each individual creditor. This benefits you because you only have to make one payment, and additionally it gives creditors more assurance that your payments will be made on time every month.

Credit counseling agencies can also help you build a budget that's simple for you to follow and help alleviate some of the stress your debt has been causing you. As long as you stick to the plan a debt management program will save you money, pay back debt sooner and have a positive effect on your credit score.

 

Debt consolidation needn't be scary, and there are many options which will help you get out of debt faster. Research all your options and then select the one that works best for you and your financial situation.

Benefits of Debt Consolidation