Is Debt Consolidation in Suffolk County a Good Idea?
For more than 25 years, the residents of Suffolk County have been turning to Richard S. Fiensilver, Esq. of Your Long Island Bankruptcy Attorney to assist them with their consumer debts. An expert in bankruptcy law, Mr. Feinsilver has successfully helped more than 7,500 clients throughout the Halesite, NY area erase their debts and get back on track financially. If you’re in need of debt management solutions, put your mind at ease and contact Your Long Island Bankruptcy Lawyer. We’ll help you settle debt so you can start working toward a brighter financial future.
You have multiple credit cards, student loans, utility bills, and even medical bills. They’re all piling up, and despite your efforts to repay them, it doesn’t seem like you’re making a dent. In fact, it’s getting harder and harder to make ends meet; most of your paycheck goes to your creditors, leaving you with little left over for your other day-to-day expenses (and forget about treating yourself or planning for the future).
In short, you’re in serious debt, and it’s a serious problem. You don’t know how you’re going to manage to repay your bills and you’re afraid that your credit is going to take a big hit. You’ve heard about debt settlement programs and after doing some research, you’ve decided that isn’t the best option. You’ve also heard about debt consolidation, and you’re wondering if it could be the solution to your financial woes.
Before you decide to consolidate your debt, you really need to decide if it’s the right choice.
What is Debt Consolidation?
Debt consolidation refers to combining multiple debts into a single monthly payment; usually a 0% balance transfer credit card or a low-interest personal loan. While debt consolidation doesn’t erase your debts, it does make them easier to manage because, let’s be honest, paying one bill to one creditor is a lot easier than paying several bills to several creditors.
In addition to simplifying the repayment of your debts, there’s a chance that debt consolidation could allow you to pay off your debts faster. Since you’ll (hopefully) get a lower interest rate on your credit card or personal loan, you’ll be able to pay more toward the principal balance, so in effect, with debt consolidation, you could be debt-free a lot faster than you would be if you stuck with your original repayment plans (which could take years, if not decades to pay off).
So far, a debt consolidation sounds like a pretty good idea, doesn’t it? Don’t rush to open up a balance transfer credit card or take out a personal loan just yet; there are some downsides to consolidating your debt that you need to be aware of.
The Downsides of Debt Consolidation
On the surface, debt consolidation looks like a pretty sweet deal; but remember, appearances aren’t always what they seem. Here’s a look at some of the cons that you may encounter when you consolidate your debt.
Low-interest rates aren’t guaranteed
Ideally, you’ll get a low-interest loan or a credit card with a 0% introductory interest rate, but that’s not guaranteed. In order to get a good interest rate, your credit needs to be in good standing. If you’ve been late with payments, you’ve missed payments, or you’re debt utilization ratio is high, chances are your credit score is less-than-prime.
Even if your credit score is good and you do qualify for a low-interest rate loan or balance transfer credit card with a 0% introductory interest rate, that doesn’t mean the interest rate will stay low over the repayment term. In fact, with a balance transfer credit card, that 0% APR is only offered for a small window of time; if you don’t repay the balance before that period expires, the balance is subject to the standard interest rate, which might end up being pretty high.
Your credit could take a hit
Whenever you open up a new line of credit, your credit dips, and when you take out a debt consolidation loan or balance transfer credit card, you’re taking out a new line of credit. Generally, opening up new lines of credit doesn’t have a huge impact on your credit score; however, if your score is already iffy, a few points could put you in a dangerous position.
You aren’t eliminating your debts
As mentioned, debt consolidation doesn’t eliminate your debts, it just means you’re transferring multiple debts to a single creditor. In other words, you’re rearranging your debt; you aren’t getting rid of it. Sure, it might be easier to manage one payment, but if that payment is super high, you might have a hard time making it.
Your money management doesn’t improve
Typically, when Suffolk County residents consolidate debt, their debt grows larger instead of smaller. That’s because they don’t have a plan of action in place; they continue to spend and pay their bills the same way they did before, so in the end, they aren’t really gaining anything. In fact, they often do more harm than good.
Chapter 13 Bankruptcy: A Better Option than Debt Consolidation
If you’re looking for a way to really wipe the slate clean and you want to set yourself up for a better and brighter financial future, instead of debt consolidation, consider Chapter 13 bankruptcy.
With bankruptcy, instead of transferring your debts, your debts are completely eliminated; that means that you get to start fresh without any financial burdens weighing you down. You’ll also learn helpful tools and strategies that you can use to improve the way you manage finances so you can avoid falling back into the debt trap. Plus, bankruptcy is usually a lot more affordable than debt consolidation, especially when you’re working with a reputable Suffolk County attorney.
Contact Your Long Island Bankruptcy Lawyer Today!
Given all of these benefits, it’s easy to see why so many people in the Halesite, NY area are opting for bankruptcy over debt consolidation. To find out more about the benefits, contact the most trusted bankruptcy attorney in the Suffolk county area, Richard S. Feinsilver, Esq. at Your Long Island Bankruptcy Lawyer.
You can get out of debt once and for all and start on the path toward a bigger and brighter financial future. To schedule a consultation at our Halesite, NY office, please call 516-873-6330 at your earliest convenience.
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