Debt Consolidation Loans
Many consumers in New Mexico and across the nation are distressed over credit card debt they've accumulated due to any number of factors, such as reduction in income, unemployment, medical bills, or personal hardships that essentially force them to rely on credit cards, often for some of the essentials in life. With debts spread across multiple credit cards and other types of unsecured debts, a debt consolidation loan may be a viable option for many consumers, however, this option comes with certain financial risks that should be carefully considered in advance of taking on additional debt.
It's also important to understand that many individuals and families have also experienced relief from their debts through a variety of alternative debt relief options, including debt consolidation relief programs, debt management plans coordinated by a consumer credit counseling service, debt settlement, debt negotiation, and even bankruptcy.
If you are struggling with credit cards and other unsecured debts, find out how debt relief plans may be able to help you resolve debts and save money by resolving debts at an accelerated pace. Get your free debt relief evaluation and savings estimate.
How Do Debt Consolidation Loans Work?
Debt consolidation loans are designed to combine or "consolidate" multiple high interest rate debts into a single loan with a lower interest rate. The basic concept that applies: The consumer uses the proceeds from the consolidation loan and pays off high interest credit cards, then, ideally, is left with only one lower interest rate debt consolidation loan to payoff. This option seems perfectly logical and debt consolidation loans, especially at a much lower interest rate, do have their place as a form of debt resolution for some consumers.
That being said, unless the consumer has a strong or excellent credit standing, the loan may come at a relatively high interest rate which could defeat the purpose of the loan in the first place. In addition, it may not be in your best interest to take "unsecured" debt such as credit cards and convert the debt into a new loan that is "secured." Why? Because secured debt is backed by collateral, usually a home or some other valuable asset. If consumers find themselves in a difficult position financially and fail to live up to the terms of their debt consolidation loan, they could risk losing their home or other asset. What's more, many consumers who take out debt consolidation loans do indeed payoff their credit cards, but they often end up accumulating a whole new batch of credit card charges. Now they are responsible for paying off a debt consolidation loan AND a new cycle of credit card charges. Unfortunately, this scenario is very common, and the consumer's debt crisis has only escalated.
Considering a debt consolidation loan? First take a moment to find out how structured debt relief plans may be able to help you resolve debts quickly and save a substantial amount of money. Get your free debt relief evaluation and savings estimate.
How Debt Management Plans Save Money and Resolve Debts
Many individuals and families alike have realized much-needed relief through a debt management program. It is a popular option for consumers who are looking to get relief from high-interest credit card debts as well as other unsecured debts, such as department store charge cards, gas cards, personal signature loans, or even medical or doctor bills. With debt management plans, or DMPs, consumers seek to combine several debts into a single, more affordable, and more efficient payment plan made to a credit counseling agency. The agency then distributes the monthly payments to creditors on a continual basis until all debts are resolved.
Oftentimes, consumers feel they would benefit from having a third party debt specialist work on their behalf. They may choose to utilize a debt management program coordinated through a credit counselor, whereby the debt counselor, after speaking with the consumer, contacts creditors one by one and submits proposals requesting that they extend the benefits of debt relief to consumers who are experiencing a financial hardship. These benefits typically include lower interest rates, a waiving of late fees and penalties, and even more affordable payment terms that allows the consumer to regain their financial footing. When the consumer stops using credit cards and thus, doesn't add to their existing debt total, and then begins to pay down debts on time month after month at lower interest rates -- the process of debt resolution becomes solid and predictable. While debt management plans do not magically erase debts, they can be very effective and save a substantial amount of money if followed faithfully. Overall, they are an honorable way for consumers to resolve debts and fulfill their financial obligations as promised. In addition, while enrollment in debt management plans through credit counseling may be "noted" on your credit report, it is not harmful to credit. In fact, many consumers will find that, as they pay down their debts and improve their debt to available credit ratio -- credit scores can actually improve. It's all about paying down debt on time at a lower interest rate, therefore more of your payment is applied to the principal amount of debt.
If you are thinking about a debt management plan or debt consolidation via a credit or debt relief counselor, take a moment to find out how debt plans may be able to help you resolve debts faster and save money. Get your free debt relief evaluation and savings estimate today.
State Programs for Individuals and Families In Need
While debt relief programs have helped many Americans during times of financial hardship, other individuals and families may be in an even more urgent situation and need immediate assistance to help with the absolute necessities of life such as food, clothing, housing, rent, or medical care. The state of New Mexico has a variety of financial assistance programs available, to learn more about these resources, go to the state's Human Services Department official page Looking for Assistance section.
How Debt Settlement or Debt Negotiation Works
Debt settlement, or debt negotiation, is an increasingly popular debt relief option that is often considered a viable alternative to filing for personal bankruptcy. Debt settlement is designed for consumers, through a debt negotiator, to get individual creditors to agree to "settle" debts for substantially less than the full balance owed. Debt settlement typically involves the process whereby consumers in distress stop paying high interest credit card minimums. They instead begin to "set aside" or save those monies to be used for the purpose of extending a debt settlement offer to a credit card company through the debt negotiator.
It's important to be aware that debt settlement is an aggressive debt relief option that, while popular and effective, is not without it's drawbacks. Consumers should know that when they stop paying credit cards according to the terms of their agreements, creditors can threaten or take legal action, although this is an option they often choose may not to pursue. In addition, money that is saved by settling, which can be a large sum, is subject to taxes. Finally, debt settlement will typically have a negative impact on personal credit, but even so, not as serious or long lasting an impact as personal bankruptcy.
If you are needing to remove the burden of credit cards and other unsecured debts through a debt assistance program, you can get more information regarding your debt relief options. Answer a few simple questions online and request your free debt relief evaluation and savings analysis.