Debt Consolidation: An Alternative to Bankruptcy

Featured Partner

Whether you’re facing the moment that you might be considering bankruptcy, or you’re just trying to get a handle on your finances before they get out of control, debt consolidation might be worth considering. It’s a way for you to pay off your debts without having to worry about it making your credit score take a dive.

Understanding Debt Consolidation

Debt consolidation is the process of taking out a single loan to pay numerous outstanding debts (this can include credit card debts, loans, etc.). This approach is often best for those who don’t have a ton of debt and if their credit is in decent shape to allow them to get their hands on a loan.

There are two main ways to embrace this approach to restoring your credit. The first and most popular option is to get a credit card that allows you to do a balance transfer. Just make sure that it has a lower interest rate than you’re currently being charged in order to ensure the best approach.

The second option is to take out a loan that comes with a fixed rate. This can help you get a lump sum and use it to pay off your debt in its entirety. Not just any loan works the best for this approach, as you don’t want to risk a change in the future that results in a higher interest rate.

The Advantages of Debt Consolidation

Many might think that bankruptcy is their only option. However, debt consolidation has become a popular solution for many, thanks in part to the benefits listed below.

· A sense of control can finally be embraced when it comes to your credit score.

We all know how things can snowball if they’re left unpaid. This is a way that you can bring under a single roof to make it easier to manage your debts. Thus, providing you with the control rather than letting the control slip from your grip.

· It’s much easier to manage a single monthly payment than to have to make many.

Times can get hectic if your debts require you to pay multiple installments each month. By embracing consolidation, you’re bringing all of your unpaid debt into one easy-to-make monthly payment.

· You could embrace lower interest rates on your outstanding debt.

Interest rates can get expensive but think of this as an opportunity to embrace one that’s much lower. This will save you money over the long-term and it can even provide the opportunity to pay less right now.

If you approach debt consolidation wisely, it could take your credit score on an uphill climb that is sure to unlock opportunities in the future. Just make sure that the way you go about it provides you with both short-term and long-term benefits.