Are the Risks of Debt Consolidation Loans Worth It?

Debt consolidation loans: why risky? Debt consolidation solves nothing. It does not make you change your debt-causing habits. Without fixing the root cause, the situation will worsen. Thus, debt consolidation loans may seem to simplify payments, but they only work in the long run if you are financially responsible and stick to a budget to get rid of Bankruptcy in Orlando

Second, loan consolidation businesses offer nothing you can not accomplish yourself. If you are just making minimum payments on your debt, talk to your creditors about realistic payment plans. Creditors do not prefer any service or firm, and if they have not turned your debt over to a collection agency, they will work with you directly as long as they get paid.

Third, loan consolidation may cost extra. Many services require high upfront costs, “voluntary” payments, or concealed monthly fees. Some feature “pay-off” costs that prevent early repayment. By consolidating your debt into a reasonable minimum monthly payment, you fail to pay off the debt, allowing interest to build and costing you more over time. Finally, some consolidation loans feature steep penalties for late or unrealistic payments.

Fourth, lines of credit and home equity loans demand collateral. Some consolidation loans offer cheaper interest rates, but you could lose your house if you can not pay.

Are alternatives available to the deafening chorus of voices proposing a quick fix? 

Although challenging, there are alternatives:

• First is self-help. Examine your spending habits, create a budget, and find ways to cut back. When you fall behind, contact your creditors immediately. Remember, creditors want to be paid and may work with you to create a manageable payment schedule.
• Consider debt counseling. Credit counselors at respectable organizations are certified and equipped to assist you in designing a customized strategy to reduce debt and avoid future debt. These organizations provide educational workshops and information. University, military, credit union, and housing authority programs are non-profit.
• Be prepared. Check with your state Attorney General, local consumer protection agency, and Federal Trade Commission before hiring a consolidation corporation or non-profit credit counseling organization. Find out what the company sells, how much it costs, and how long it takes to deliver. Read contracts and do not trust verbal assurances.

Speak to a bankruptcy lawyer in Orlando!

Consult a bankruptcy lawyer. In some circumstances, bankruptcy may be your best option. Bankruptcy might help you avoid foreclosure and start over. A bankruptcy attorney can help you understand its dangers and benefits and decide if it is right for you.