Alternatives to Debt Consolidation
Not everyone is going to benefit from getting a debt
consolidation loan. Many will, but some need something else.
Let’s look at our possibilities.
Firstly there is the debt consolidation itself. Many people find
it helpful and their debts more manageable if they get a debt
consolidation. It is a new loan that is taken out to pay off
your existing debts. You use this debt consolidation to pay off
all of your credit cards and then you pay down the loan itself.
It usually makes your payments smaller and saves you money in
interest rates and credit card fees down the road.
But what if a debt consolidation is not right for you? If you
have a lot of debt that you are unable to pay off – even if the
amount each month was a little less – you are probably not going
to benefit from a debt consolidation. If your bills are behind –
this is not really going to help you much.
But there are options – there is bankruptcy of course which will
wipe out all of your debt – but stays as a negative on your
credit for a very long time. Bankruptcy should be considered the
last ditch effort when you can’t make any payments and are way
behind in your debt. There is also a debt management plan. These
plans are designed to help you pay back a portion of what you
owe them over a longer period of time. It can be used in
conjunction with a debt consolidation sometimes – but these are
becoming quite commonplace.
A debt management plan is also bad for your credit and will stay
on your credit report for six years – so this is something to
consider when taking one out. There are no easy solutions to
paying off your debt other than simply paying it off, but you
can get some assistance with it if you need it.
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