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What Type of Debt Do You Have?
The average Salem resident accumulated $222 dollars in debt in 2016. Salem citizens racked up a total of $5.6 million in debt in the 2016 fiscal year.
If you've got some serious debt accumulating, it can be extremely daunting. When the bills keep piling up, and you might not know where to turn to for help. Maybe you've heard a bit about debt consolidation but aren't too sure on how it can help you climb your way out from the hole you're in.
Debt consolidation doesn't have to be scary, and there are many options which will help you get out of debt faster. Research all of your options and then pick the one that works best for you and your financial situation.
Typically a secured debt consolidation loan allows you to lump most of your debt payments under a single bill at a lower rate than the individual rates you may have 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 have and how much it's worth. These types of loans can also be repaid back over a long length of time, anywhere from 5 to 30 years, and they can often boost your credit rating if managed properly. Otherwise, you risk defaulting on the loan and losing the asset used as collateral.
Much like a secured debt consolidation loan, an unsecured debt consolidation loan lets you 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 interest rate could be somewhat high. These loans are determined according to your credit history and score, and the upside to an unsecured debt consolidation loan is that you aren't in jeopardy of losing your asset should you default.
A home equity loan lets you borrow money, using your home as collateral. This home equity loan is essentially a second mortgage that allows you to turn the equity on your home (the money your property is worth minus the amount you owe on it) into cash to be used at your discretion, such as debt consolidation. These loans are set up to be repaid quicker than your mortgage in equal payments with a fixed interest rate.
Home equity loans are secured loans which have the same risks and rewards already mentioned.
There are also programs which permit you to consolidate all of your credit card debt into one single payment (and interest rate). If you've got good credit, you could also be able to negotiate a lower interest rate on your credit cards, making it easier to repay.
Another option is to qualify for 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 should pay double payments in order to pay off your debt faster. But understand that the interest may very well be fairly high after the promotional period. Consider this way of consolidating debt only if you know you can pay off the debt while the introductory rate is in effect.
Another option with respect to debt consolidation is to enroll in a debt management program. A credit counseling agency will 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 so that they can reduce interest rates and fees.
Once the repayments are negotiated you will usually set up 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 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 develop a budget that's simple for you to follow and help alleviate some of the stress your debt has been causing you. If you stick to the plan a debt management program can help you save money, get rid of debt sooner and have a positive effect on your credit score.
Debt settlement is a strategy intended to pay off debts for less than you owe in a timeframe less than if you pay the debt in full. Debt Settlements are usually reserved for higher debt amounts of at least $10,000. Usually, the consumer enlists the help of a professional debt settlement company and/or lawfirm.
Those who choose to settle their debt can end up paying less than the full amount they owe. You will usually damage your credit in the short term, and there is a risk of litigration from creditors.
If you are serious about settling your debt, give us a call and we will see if you qualify.
|Date||Company and Reason|
|03/15/2018||A complaint against Alliance Data Card Services was filed on 03/15/2018 regarding credit card or prepaid card practices|
|03/14/2018||A complaint against Social Finance, Inc. was filed on 03/14/2018 regarding debt collection practices|
|03/06/2018||A complaint against AMERICAN EXPRESS COMPANY was filed on 03/06/2018 regarding debt collection practices|
|03/02/2018||A complaint against DISCOVER BANK was filed on 03/02/2018 regarding debt collection practices|
|02/26/2018||A complaint against CL HOLDINGS LLC filed on 02/26/2018 alleges that CL HOLDINGS LLC is utilizing inappropriate communication tactics with the consumer during debt collection attempts.|
|02/19/2018||A complaint against CITIBANK, N.A. was filed on 02/19/2018 regarding credit card or prepaid card practices|
|01/31/2018||A complaint against Resurgent Capital Services L.P. was filed on 01/31/2018 regarding debt collection practices|
|01/19/2018||A complaint against Law Office of Michael J. Scott, PC was filed on 01/19/2018 regarding debt collection practices|
|03/01/2017||A complaint against AMERICAN EXPRESS COMPANY was filed on 03/01/2017 regarding credit card practices|
|02/08/2017||A complaint against SUNTRUST BANKS, INC. was filed on 02/08/2017 regarding credit card practices|
Last updated: 2018-04-12
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