Personal Loan - Pennsylvania
If you are overburdened with debts stemming from credit cards, as well as other types of unsecured debts (like medical bills, retail store charges, or utilities), perhaps you have been considering a personal loan. This is one debt relief option, but there are a number of others that you may want to consider as well. These days, your available debt relief options can include personal loans, debt consolidation through a credit counseling agency, debt settlement, or even bankruptcy. To find out which option may be right for you, here's a brief overview:
A personal loan typically involves combining your high-interest credit card debts into one, lower interest loan. On the other hand, debt consolidation typically involves combining, or "consolidating," your credit card debts into one, more structured, and more manageable payment made to a credit counseling agency to be distributed to individual creditors.
Yet another option is debt settlement, where you are hoping to settle or negotiate with creditors for substantially less than your actual debt amount. These days, the debt relief methods mentioned have become popular alternatives to bankruptcy - which can have a devastating and longer lasting impact to personal credit.
To find out how much you can potentially save when you consolidate your debts, request a free debt relief estimate and savings analysis - at no obligation to you.
Understanding Your Debt Consolidation Options
The term "debt consolidation" has come to represent a range of debt relief options. However, what debt consolidation typically involves is combining or consolidating credit card and unsecured debts into one, more affordable, and more manageable monthly payment made to a credit counseling agency. Many consumers have even have heard of debt consolidation being referred to as a debt management plan, or a DMP.
When you enroll in a debt consolidation program, you usually begin with a one-on-one with your personal credit counselor who will review your finances, income, and total debt amounts. Once they have a clear picture of your financial situation, they will typically develop a strategy that can hopefully lead to a more lenient and more affordable payment plan for you. This strategy generally involves submitting proposals (on your behalf) 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. As mentioned earlier, the goal of debt consolidation through credit counseling is - with a single, more structured, and more affordable payment plan, you can typically direct more of your payment towards paying off the principal of your loans rather than just the interest - and eventually, reduce your debts sooner than if you continued making the monthly payments on your credit card debts at higher interest rates.
Can I Pay Off Debts with a Personal Loan Instead?
Many consumers, depending on their debt situation, may consider applying for a personal loan to help pay off their credit card debts. As noted earlier, a debt consolidation personal loan is a form of debt relief that typically involves combining your high-interest credit card and unsecured debts into one, lower interest loan. A debt consolidation loan involves taking unsecured debt and paying it off with funds that come by way of a "secured" loan, or a loan where you would have to put up a collateral, like your home or other asset.
Keep in mind, that unlike debt consolidation through credit counseling, a personal loan involves paying off your debts with a new loan. This scenario may present a potential risk for consumers who likely do not have the discipline to stop using their credit cards. Many consumers who get a debt consolidation loan generally end up using their credit cards again, and accumulate 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.
When comparing a personal loan with debt consolidation, a personal loan may be a smart move for disciplined consumers. However, debt consolidation through credit counseling does provide a way to consolidate high-interest debts into a single, more affordable payment plan, and may be a preferred way to pay off your debts on a set schedule.
The bottom line is, no matter how overwhelmed you are with credit card debts, there is help available - be it in the form of a debt consolidation plan, personal loans, or debt settlement. Request a free debt relief analysis and savings estimate . Start by answering a few, simple questions here.