Debt Consolidation Service Near Me in Bucks County
For people that are seeking relief from debt, debt consolidation may be the best option. During debt consolidation, debtors will combine several unsecured debts into a single monthly bill that they pay to a debt consolidation servicer, who contact creditors on behalf of debtors. While debt consolidation can make repayment easier for people that are facing debt, there are some drawbacks that may dissuade people seeking debt relief.
Declaring bankruptcy may be more suitable for some people seeking relief from crippling debt. To learn more about the advantages and drawbacks of bankruptcy and debt consolidation, get in touch with Bucks County bankruptcy attorneys Young Marr & Associates, who can use their expertise to help clients reclaim their financial futures through the declaration of bankruptcy. Get in touch with Young Marr & Associates today by calling (215) 701-6519.
Understanding Debt Consolidation
When debts are consolidated, they are combined to create one monthly bill that can be paid all at once. The monthly bill will be less than the sum of all of the disparate bills combined. Debt consolidation loans often carry lower interest rates but will be paid off over a longer period of time compared to other bills; debt consolidation makes it easier for people to pay off the principal amount that they owe, rather than the interest, which can accumulate. (The interest rate for debt consolidation loans is set according to a debtor’s credit score and past spending behavior.) The overall amount of debt that a person must pay will not decrease; consolidation will only make it easier to pay.
Most unsecured debts can be included in a debt consolidation loan, including credit card debt, student loans, medical bills, utility bills, payday loans, and taxes. Credit card debt is the most common type of debt that is consolidated, but pretty much any type of loan can be included in a debt consolidation.
People that are interested in debt consolidation should note that it is from a different debt settlement. When a debt settlement occurs, a debtor will pay a lump sum that is equal to the amount that they owe to their creditors. Counselors from credit counseling services will negotiate for debtors during a debt settlement. While a debt consolidation is about reducing the number of creditors that the debtor owes money to, debt settlement is about reducing overall debt.
Ways to Consolidate Debt in Bucks County
There are a few ways for debtors to consolidate debt. The ways that debtors can consolidate debt include:
- Personal loans – Personal loans for debt consolidation may be issued by banks, credit unions, or online lenders. The money that is loaned can be used to pay the debt that the debtor owes. The interest rate on the personal loan will be determined by the debtor’s credit score, income, and past spending decisions. Personal loans for debt will usually have a repayment period of three to five years.
- Balance transfer credit card – With a balance transfer credit card, a debtor can transfer their debt onto one card, which usually has a 0% interest rate, at least for the first few billing cycles. Some balance transfer credit cards charge a small fee to transfer the balance, though not all.
- Home equity loans – Debtors that own their homes have the possibility of borrowing against the equity in their homes and then consolidating their debt in a home equity loan. The interest rates for home equity loans is usually lower than that of personal loans. This type of debt consolidation loan is risky, however, because the debtor can lose their home if they do not pay back their loan. (It is also possible to do debt consolidation through a 401(k) loan.)
Bankruptcy vs. Debt Consolidation
Debt consolidation is the best option for some Bucks County debtors, though not all. For some people that are seeking a way out of debt, bankruptcy may be a better solution. Bankruptcy is a better option for some people because, after declaring bankruptcy, creditors are no longer able to pursue collections actions against the debtor. Common collections actions include utilities being shut off, the repossession of property, and even home foreclosure. Debt consolidation can also be disadvantageous for some debtors because the IRS may consider the money saved to be taxable income, which means that the money saved in the short-term will still have to be paid at a later date.
People that are considering debt consolidation should note that debt consolidation can either raise or lower credit scores, depending on their spending habits. Debt consolidation can help debtors raise their credit scores by making it easier for them to make payments, which will decrease their chances of missing payments. Debt consolidation also makes it easier for people to budget and manage their finances in a more effective way. Credit scores may be damaged during debt consolidation, though, since inquiries made by loan providers will appear on credit reports. Some debtors may be more susceptible to acquiring debt after going through debt consolidation since they have new forms of credit.
Debt Consolidation Attorneys Serving Bucks County
If you would like to learn more about debt consolidation or bankruptcy, get in touch with the Bucks County bankruptcy attorneys at Young Marr & Associates. The experienced attorneys from Young Marr & Associates can help clients from all over the Bucks County region create solutions for their financial futures. Contact them today to schedule a consultation by calling (215) 701-6519.