Bad Credit Loan
Due to financial hardships that are often out of their control, many residents in North Carolina and across America are experiencing a debt crisis that has left them dealing with bad credit and the possibility of getting a loan. Often struggling to make ends meet, many consumers are also falling several months behind on their credit card payments, leading to higher interest rates and a negatively impacted credit rating. If you are also experiencing your own debt crisis, you can breathe a little easier because help is available - in the form of debt consolidation, debt settlement, or loans. With debt consolidation, or credit counseling, consumers can combine multiple credit card and unsecured debts into a single, easier-to-manage, and simplified payment plan made to a credit counseling agency.
While debt consolidation has certainly helped many consumers in debt, there are alternatives to this approach. Depending on your situation, your other debt relief options may also include debt consolidation loans and debt settlement - where consumers can try to negotiate with creditors to pay for a significantly reduced amount than what they owe. Like debt consolidation, debt settlement and loans have become popular alternatives to bankruptcy - which has a more damaging and longer lasting impact on personal credit. Explore your debt relief options now by answering a few, simple questions to get a free debt relief analysis and savings quote.
Given the choice of dealing with multiple payments every month or having just one payment to worry about, many consumers choose the latter. That is generally the idea behind debt consolidation or what is also known as a debt management plan (or DMP). Debt consolidation allows you to combine, or "consolidate," multiple credit card and unsecured debts into one, more structured, and more manageable monthly payment made to a credit counseling agency.
When you enroll in a debt consolidation program, credit counselors review your finances - taking into account your debts and source of income. Once they determine how much money you can reasonably allocate to paying off your debts, they will typically develop a strategy, submitting proposals to creditors asking for reduced interest rates, or the waiving or elimination of any late fees or penalties. Creditors that agree to the proposals are placed into the debt management plan. The goal is, with a single and more structured plan, you can hopefully pay off your debts at a pace that you can afford - even if you have bad credit and without taking out a loan.
How Loans Can Affect Your Credit
Many consumers in North Carolina apply for debt consolidation loans to pay off their credit card debts and other types of unsecured debts (such as medical bills, retail store charges, or even utilities). With their reduced interest rates, debt consolidation loans can certainly help many individuals trim their debts because they have, ideally, combined all their high-interest debts into one, lower interest loan.
However, debt consolidation loans can be risky: Debt consolidation loans typically involve taking unsecured debt and paying it off with funds that come by way of a "secured" loan, meaning, it is generally a loan where you would have typically put up your home or other asset to get approved. If, for any reason, you fail to make your loan payment, you would have essentially put your home at risk. In many cases, consumers who get debt consolidation loans also end up using their credit cards again and accumulating new charges. As a result, many of them will have new, high-interest credit card debts to deal with on top of their loan. Under this scenario, a debt consolidation loan has generally made their debt situation go from bad to worse.
Comparing Debt Consolidation and Loans
While debt consolidation and debt consolidation loans can certainly provide relief, the process in which they help you pay off your debts may vary. As mentioned earlier, with a debt consolidation loan, the goal is to combine high-interest credit card and unsecured debts into one, lower interest loan. Since it generally means taking unsecured debt and paying it off with funds that come by way of a "secured" loan, you could be putting your home or assets at risk - should you default on the terms of your loan agreement.
In contrast, with debt consolidation, you are combining or consolidating credit card and unsecured debts into one, more structured, and more lenient monthly payment made to a credit counseling agency. The goal of debt consolidation is, with a single, more structured, and more affordable payment plan, you can ideally reduce or pay off your debts sooner than if you continued making the monthly payments on your credit card debts at higher interest rates. It stands to reason then, that for many consumers, debt consolidation, if followed faithfully, may be a preferred way to pay down debts at a more predictable pace - in spite of bad credit or in lieu of taking out a loan.
The bottom line is, if you seek relief from debts, explore how debt relief can help you get back on the road to financial health and on a path to becoming debt-free. Start by getting your free debt relief analysis and savings estimate.