Understanding Your Debt Consolidation Options
Which type of debt consolidation is best for you?
If you’re thinking about debt consolidation, you probably realize that not all debt consolidation options are the same. From consumer credit counseling to home equity loans, debt consolidation options differ greatly.
I’m Max Anderson and I’m going to review some of the most popular debt consolidation options with you.
Home Equity Loans
Perhaps one of the most common debt consolidation options are home equity loans. Not only can home equity loans help you consolidate your debt, they can usually help you do it at a very good interest rate.
The only problem with using the equity in your home for debt consolidation is that you’ll be putting a lien against your house. If for some reason you weren’t able to make your debt consolidation payment, your house could be foreclosed upon.
Balance Transfer Options
Many times people will consolidate their debt by transferring their different credit card balances to one low-interest credit card. Oftentimes they will do this because the credit card they will be using is offering a special introductory interest rate, sometimes as low as 0 percent.
While this type of debt consolidation can be very convenient, it’s important that you are able to pay off the debt before the introductory interest period is over. Otherwise you may be paying more in the long run than you would have originally.
Credit Counseling Services
Many credit counseling services also offer debt consolidation. They negotiate directly with your credit card companies to get you a lower interest rate. You pay the credit counseling service one monthly payment and the credit counseling service in turn pays your credit cards.
While this type of debt consolidation service can be helpful, you could probably manage the same result by taking advantage of balance transfer offers and consolidating all of your credit cards into one low-interest credit card.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is a serious form of debt consolidation. This type of debt consolidation will impact your credit in a very negative way so it is important that this be the very last option you turn to. However, if you have no other choice and all of your other avenues of debt consolidation are dead ends, Chapter 13 may be what you need in order to consolidate your debt.
Deciding which debt consolidation option is best for you is simply a matter of looking at what’s available and pursing the debt consolidation service that best meets your needs.